Bob Trebilcock

Supply chain software: How to run an ROI-based WMS selection process

If you’re like me, you’re tired of talking about how bad business is. That’s why it was great to talk the other day with Harlan Mason, vice president of shared operations for PSS World Medical, a distributor of medical products and pharmaceuticals to medical offices with about $2 billion a year in revenue.

Mason was preparing to deliver a presentation on how to do an ROI-based WMS selection process at RedShift, RedPrairie’s annual user conference held this year in San Antonio. PSS World Medical has a high level problem most of us would love to tackle: What kind of WMS system can help a company accommodate an 8.5- to- 9.5% annual growth rate? That’s right: Business is good at PSS World Medical, and that growth was creating operational challenges.

“We were running paper-based warehouses,” Mason said. “Based on our revenue growth, the business had become much more complex, and it was taking an employee in the warehouse a long time to get up to speed.”

Contributors to that complexity included more than just the additional orders that had to be processed. There are regulatory issues associated with medical products, like capturing lot/batch and chain of custody information, cold supply chain regulations, hazardous material disposal requirements. What’s more, the network has become more complex comprising about 38 distribution facilities across its businesses. Last but not least, the distributor’s model includes tight order turnaround times to meet customer delivery requirements.

“One of the themes of our company is that we’re looking for opportunities to simplify our business,” Mason said. “The WMS is one of several different initiatives we’re implementing to take waste out of our business.”

The goal for the WMS selection process was to find the best system to automate paper-based processes, make it easier to get new warehouse employees up and running, enable the company to meet all of its regulatory requirements, and contribute to the effort to streamline the business. With that in mind, Mason said they followed a handful of steps in the process that led to the selection of RedPrairie.

Put together a diverse team: Mason and his colleagues pulled a team together from across the company, including order fulfillment operations, purchasing, and logistics, and not just IT. In essence, it was a process-driven process, not an IT-driven process.

Get educated: Once a team was put together, they spent a lot of time just learning about WMS systems through meetings with several leading vendors – both best-of-breed and ERP providers – and by site visits to about 20 different distributors. “Throughout that process, we were working with all of our stakeholders to define where we could gain value in our operations from a WMS,” Mason said.

Separate fact from fiction: Once the team had some understanding of what the WMS market looked like, they brought in outside consultants (Tompkins Associates) to help them navigate the rest of the process. “We had reached a point where we needed an organization that could help us understand the different components of the cost structure, and what they meant,” Mason said. “That’s what Tompkins was able to provide.” By the way, you can hear what Jim Tompkins, the consulting company’s CEO, has to say about the state of the automation industry on MMH.com.

Demo a solution: Along with helping PSS World Medical understand the finances of a deal, Tompkins put together a week of meetings where each vendors put on a full-day presentation of their solution to all of the stakeholders. “We developed a scorecard of factors that were important to us to compare the vendors,” Mason said.

The vendors were evaluated against six primary factors besides price:

At the top of the list was simplification: They wanted a new employee to be able to get up to speed quickly.

The solution had to scale, given the company’s plans for continued future growth.

The IT department wanted a solution that would easily integrate with the company’s ERP system.

The ability to support voice was crucial, as was familiarity with the pharmaceutical industry.

Finally, the cultural fit between PSS World Medical and the vendor was important. “We had to have confidence in the people we would be working with beyond the sales cycle,” Mason said. The distributor went so far as to meet with people who would work on the implementation team.

What led to the final selection. “At the end of the day, we felt the system met or exceeded our needs and IT were comfortable with the technology,” says Mason. “Most important, the cultural fit was there. We felt like RedPrairie really understood the pharmaceutical space.”

Now that the selection process is complete, the company is working with RedPrairie on fine-tuning the solution that will get implemented, with the first facility scheduled to go live in Houston in October.

“Once that’s up and running, we’ll roll out pretty aggressively,” says Mason.

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Posted by Bob Trebilcock on May 14, 2009 | Comments (0)