What to consider when purchasing a Warehouse Management System (WMS)
If you are reading this there is a better than average chance that you are doing some preliminary Internet research into the purchase of software. You might be looking for warehouse management software, inventory management software, or order processing software. Why are you looking? Probably, you own or work for a growing business. You may have one warehouse, or you may have several. You may, or may not, have a budget. You may, or may not have a team of software and computer personnel in your company.
How can a single Internet posting help you understand your options and help you make a decision? Clearly, it can’t. The most we can hope to accomplish here is to offer some general parameters to narrow your search and help you begin what will be some extensive research that will lead to making a decision. This future decision has the potential to launch your company to new heights, or cause you untold levels of frustration.
One thing is certain – this is an extremely important decision, especially if you are seeking fulfillment execution. You can build it, advertise it and sell it, but if you can’t get it to your customer, none of that will matter.
So, the first thing to do is document your current fulfillment activities. Create a flow chart. Write down all the activities that various personnel do every day. Think about how your company purchases things. How are they received? How are they offloaded? How is inbound inventory segregated for quality inspection? How do you allocate loading bays and receiving floor space? How do you assign receiving personnel? How are items put away? How are put away / inventory storage locations allocated? How are inventory records retained? Are there date / time issues to be addressed that may require lot number management and / or FIFO picking sequencing? How are items picked? What equipment is used? How are picking personnel assigned? Where does inventory go after picking? How integrated are your labeling and shipping processes?
That is a very labor-intensive task. But, we can assure you that if you do the flow charting well, you will be far more likely to ensure that the warehouse / inventory / fulfillment / order software you purchase will not only match your current processes, but also permit you to grow and prosper.
Only after you can clearly articulate your current processes, in detail, can you really address concerns such as increasing sales without increasing warehouse staff or facility size.
That’s important, because you may not have the luxury of increasing the size of your warehouse, or the size of your warehouse staff.
It’s also important because it will help you to manage the peaks and valleys of seasonality. It will help you anticipate the dependability of your supply chain and plan around lead times and historical incoming inventory rejection rates.
Even if your systems are currently “paper based,” it will enable you to take advantage of the most modern and efficient bar coding processes.
Knowing your current processes and forecasting the requirements that you will have to address as your company grows will help you to determine whether an on-premises, or cloud based, system will be best for you over the long run.
How you receive your orders will be hugely important to planning your fulfillment strategy and the tools you will need to accomplish it. Are you part of an omni-channel distribution universe? How important are Internet orders today? How important will they be tomorrow? Do you integrate ASN printing? Do you receive orders via EDI? Where, and how often are labels created? Does the information generated ever conflict and cause confusion?
As a part of creating your flow chart, you should also look at challenges that you face. For example, how accurately are you translating orders into shipments? What is your error rate? How visible is your inventory? How fast are you consuming it? When do you need to reorder? Where will you put it when it arrives? Do you assign incoming inventory to virtual inventory locations, or do you have to move inventory around in the warehouse to keep incoming inventory in the same location as the inventory you already have in stock?
Additionally, as you create your fulfillment flow chart, consider how much it costs you to carry inventory. If you could depend on getting it faster and with greater accuracy, how much would that save you in inventory carrying costs? How much would it save you on real estate costs – do you ever have to rent spill-over warehouse space to manage surges in business due to seasonality, or other reasons? When you endure business surges do you have to hire new staff in the warehouse and, if so, can you train them quickly and do your systems ensure that they can’t make mistakes? Do your systems have checks and balances to make sure that items are not picked, or shipped, incorrectly?
How often do you have to conduct cycle counts? How significant are your inventory quantity variations? How much manpower could you save if the system automatically reconciled quantities?
Saving labor cost is great, but not at the expense of accuracy. Do you know what shipment errors cost you in charge backs, freight and other costs? This should be a side-inquiry associated with creating your flow chart, because it can be a very large cost of fulfillment inefficiency.
Your flow chart should look at put-away and picking equipment. Do you always send the right equipment for the right job? Does the warehouse employee ever show up at a location with a pallet jack when they ought to have brought a high-reach truck? How do they know what to bring, and what location to go to?
Do your employees get the information they need about inventory as it relates to sales, customer service, purchasing, shipment, etc? Your flow chart should have highlights where information deficiency causes inefficiency, or added cost. By incorporating known “pain points” as you create your flow chart, it will help you to make sure that any new software you are considering will address those troublesome areas and provide cost-effective solutions.
In your flow chart, note every step that impacts your customer’s experience. Ask yourself, at this stage in my fulfillment process, what happens to my customer if things go wrong?
It’s only after you have really spent a lot of work documenting your current processes, your problems, your opportunities, your costs and the impact all of that has on your customers, employees and suppliers that you are even remotely ready to start thinking about the system you need to manage your fulfillment execution processes.
An important consideration when you finally get to the stage of considering solutions is whether the software you are looking at is scalable. Does the software do everything you need to do today? Will it do everything you might need tomorrow? The software you buy should not require that you change the way you do your business. Instead, it should adapt simple, efficient, easily-trained processes to fit your products, customers and employees.
Your software should be adaptable to grow with you. It should have flexible reporting screens so that every employee can see all of the information they need to do their job and that information should be formatted in the best and most useful way for each individual employee. Management should be able to determine who sees what, but the “who” should be able to display the “what” in an accessible and communication-rich manner.
You should also understand how the software you are considering adapts to the ever-changing rules imposed by FedEx, UPS, USPS and others. Does your software integrate with truckload and LTL carriers? 3PLs? How is information conveyed and received? How does it interface with systems in Asia, or Europe? Do you control your information, or does it control you?
Is the system intuitive? Do you need a PhD. to use it? The system is a tool. It should help you do your job – and your job is growing the sales and profit of your company.
Where do you find software that delivers all of these very challenging attributes?