By David Litwak
Through special arrangement, what follows is an excerpt of a current story from Grocery Headquarters magazine, presented here for discussion.
Warehouse management systems (WMS) have become almost universally popular over the past decade. At first, manufacturer- and retailer-owned warehouses, as well as distribution centers, often either developed their own systems and software in-house or hired a consulting software company to develop something specific to their needs. Unfortunately, these proprietary systems were usually not robust enough to handle the increasing complexity of interconnectivity with the systems of other companies along the supply chain.
That caused the momentum to quickly shift to software developed by third-party suppliers that offered a degree of standardization among supply chain partners. Subsequent generations of WMS software have stressed their ability to be customized to specific needs and operations through a wide assortment of modules and programming written specifically for each user. Makers of many systems have also stressed the ability of their programs to handle many different phases of transportation management beyond the warehouse.
Does such a high degree of customization mean the industry has begun to return to the days when each company with a warehouse was basically running its own proprietary WMS software? And has this customization led the industry to a point where implementation has become a lot more complex and the programs may have lost some connectivity with the systems of different supply chain partners? To some industry executives, both those developing WMS software and those running it, the answers to these questions are yes and yes.
There is a group of managers who feel that the best way to corral the functions of a large, highly complex warehouse operation is to implement a comprehensive WMS program that covers as much of the operations in a standardized manner as possible. The less customization the software needs, the easier the implementation.
According to Ann Price, president of Motek, overly customized and complex WMS programs have had a negative impact on the efficiency of warehouse operations. Some of the spectacular failures to which complex WMS systems have contributed, she said, included errors in Nike's inventory management software project that cost the company $100 million in one quarter and the failure of J. Sainsbury's $700 million automation project, which led to the replacement of most of the supply chain team.
While the idea of an out-of-the-box solution to control the increasingly more complex operations of a distribution center or warehouse is appealing to almost every manager, many still feel that their unique set of operational needs cannot be adequately met by a primarily standardized solution.
Customized programs have the upper hand for warehouse operations that have variables or specific products and situations that are beyond the scope of the standard programs. For the truly unique operation, a WMS with customized components is a better approach. The one thing that most executives do agree on is avoiding a system that is completely customized, which smacks of the legacy approach of the past.
The great unknown when picking a WMS is the future. The frequency with which the logistics industry is changing, in terms of technology, function, structure and composition, seems to be increasing exponentially, which means that its future direction is hard to predict. Equally difficult is guessing what will be expected from a WMS. As the operations of the company warehouse changes and widens, will the standardized WMS or a more customized one be more advantageous? New software releases in the future will hopefully be able to cope with the warehouse changes ahead.
Discussion Questions: Does the high degree of customization in warehouse management systems mean the industry has begun to return to the days when each company with a warehouse was basically running its own proprietary software? Has this customization led the industry to a point where implementation has become a lot more complex and the programs may have lost some connectivity with the systems of different supply chain partners?