WMS and The Small to Mid Sized Company: Does it Make Sense for Your Operation to Implement a Warehouse Management System?

wms2It’s conventional wisdom: small companies want the benefits of warehouse management systems but they can’t afford them.

Conventional wisdom might say that it’s too expensive; return-on-investment takes too long for smaller and medium sized companies; it’s too complex; too expensive; too difficult. If you listen to the conventional wisdom, you might believe that the technological edge WMS offers is strictly for huge companies.

There’s just one thing: conventional wisdom has been known to get it wrong.

In recent years, the technology, like many other technologies, has improved and become more affordable. It scales to small and medium sized companies much easier than it ever has before.

The Objectives are the Same.

Typically, Fortune 500 companies have the same WMS objectives as small and medium sized companies:

  • Inventory Control
  • Cycle Time Reduction
  • Order Accuracy
  • Labor Productivity
  • Real Time information about DC Performance

Sound familiar? This is what people who operate DC’s are looking for whether they operate one or one thousand of them, whether they measure their annual revenue in hundreds of thousands, millions, or billions. Regardless of the size of your company—and of what you do—you are probably seeking one thing from your warehouse: Control. You need it just as much as larger companies do. WMS systems are one great way of delivering it.

Is a warehouse management system a viable option for you? Before you answer, we hope to provide information to help you make the call based on the facts, not conventional wisdom.

In WMS, your options include Locator Systems, Transaction Processors, Inventory Control Systems, Warehouse Management Systems, and ERP Systems.

Your fist hurdle in determining if WMS is right for your company is one of economics: you have to consider your Return on Investment, the competitive advantages a system might give you, its contributions to your long term profitability, pressures from within your industry, and customer compliance.

For small and medium sized companies, these questions are not as difficult to answer as you might think. Typically, the information is available. It’s a matter of analyzing it and your situation. WMS may or may not be for your company, but you may never know the truth if you dismiss the concept before you investigate.

Create a Multifunctional Team

To find out, you’ll need to assemble a project team. It should be multi-functional including Executives, Operations, Warehouse, Corporate IS, Inventory Control, Customer Service, and Vendor Application Team personnel. You should have a Corporate Product “Owner” and a Time-Committed Project manager involved.

This team will help you create a Systems Requirement Document.

The Implementation Partner is a time-dedicated partner experienced in WMS implementation. It supplements the company’s project team, and is project-focused. It should be an impartial advisor specifically not attached to a WMS software company so it can provide an independent perspective on all project phases. (Note: CEI Logistics provides this service).

The project should break down into four phases:

  1. Operations Assessment
  2. Vendor Selection
  3. Development/Configuration
  4. Implementation

Phase I, The Operations Assessment

Your team will study your company and analyze the way you operate to gain a full understanding of your situation.

It starts with Process Maps, which document current processes and identify opportunities for improvement. These are easily created in a number of software packages such as Visio, and should be easy to follow.

The team should move on to Activity Profiling. This helps you to capture peak transaction volumes by functional area. You’ll interview key stakeholders to develop vision of future requirements and project activity over planning horizon to create design database.

Future Business Requirement: Develop “to-be” process maps to define future operations. The team will identify IT functionality required to support future processes.

The next step is the IT Gap Analysis. In this step, you compare desired “to be” functionality to existing system functionality and document gaps in the current system.

The New System Justification phase defines recommended solution based on gaps identified, and develops a business case for new system or system enhancements as appropriate.

Phase II, Vendor Selection:

This phase helps you find and specify the right vendors for various parts of the project.

It begins with Development of Functional Specifications. The information gathered in the Assessment Phase is developed into an application specification. The application specification typically provides a list of what you need from this project to make it work for your company. It helps you qualify potential WMS vendors, which is the next step…

Next, you engage in Vendor Pre-Qualification. In this step, vendors are pre-qualified based on their experience, capabilities, and project capacity. From here, you’ll have a qualified list of vendors to work with.

The Bid Process is next. The formal Functional Specification is extended to the qualified vendor list for costing.

Once the bid process is finished, you’ll have a number of bids from software vendors. An Evaluation Matrix is established at this point. All vendor offerings are evaluated on the established criteria, and a recommended supplier selected

Finally a Vendor is selected in the final step of the Vendor Selection phase. A contract is offered to the supplier who best fits the evaluation matrix. This is the beginning of the Phase 3 activity: Software Development.

Phase III, Software Development/Configuration:

By now, you have identified the issues and the best software vendor for your needs. You’re now working with your team and the vendor you’ve selected to develop a package that works best for your company. By now, you are beyond answering the question of whether or not WMS is for your company and on to developing a software package that best fits your needs.

The Systems Requirement Document is developed at this point. The Systems Requirement Document (SRD) defines the complete software solution deliverable including client and supplier obligations. The Functional Specification is the reference document for this activity.

The final element of the systems requirement document is the project Master Schedule. It includes all mission critical milestones, and dates for required deliverables. It becomes the roadmap for what happens, when it happens, and how it happens.

Application Configuration / Development: Your Implementation Partner (an independent company that does not sell software) manages the software vendor with regard to final functionality and required modifications.

To complete this phase, we move to the Site Preparedness Audit. This is a formal activity to insure both you and your selected WMS vendor are prepared for installation and testing. It helps everyone understand what needs to be done before the project can move ahead.

Phase IV, Implementation:

This is where the project becomes reality. It’s often the most difficult time of any project, but if you completed the previous steps, it should go smoothly and on-time.

  1. Site Coordination: Actual on-site installation and testing of solution
  2. Installation
  3. Project Management
  4. Application Training: On-Site training of the user group
  5. System Acceptance Testing: Solution is tested thoroughly for both functionality and reliability, based on an established test plan
  6. Ongoing System Evaluation: Through annual check-ups and discovered opportunities for improvement, this assures a solution that maintains its usefulness through several years of business cycles.

Does WMS make sense for your company? The answer is out there, and it isn’t automatically “no” because you aren’t the largest player in your market or you don’t have two hundred locations. That’s conventional wisdom talking, and it is known to be wrong.

WMS has improved the operations of companies smaller than yours, quite likely. Only a careful analysis of your current situation can tell you for sure.

Leave a Reply

Your email address will not be published. Required fields are marked *