Published October 13, 2021
The enterprise resource planning (ERP) marketplace is full of vendors offering warehouse management system (WMS) solutions and modules. The profile of these vendors ranges from top-tier mega-suite vendors to lower-end specialty providers. Many organizations utilize these solutions to run their warehouses. For an organization using their ERP’s WMS module to support their warehousing operations, the question of the right WMS for the job is generally settled business. The solution is well established and works just fine.
But there are times when this question needs to be thoroughly investigated. These situations typically have a common theme-change. Possible scenarios include:
- New distribution centers or material handling retrofit of existing facilities where the operational flow will change significantly from current processes
- Substantial business growth that has the potential of decreasing operational efficiency and service levels, and increasing the cost to serve
- New business opportunities and changes in existing customer needs that require new services and yield significantly different order profiles and/or item characteristics
- Acquisitions and network realignments where synergies are expected by supporting operations under one WMS platform
- Changes in vendor support policies, services and product roadmaps that impact the WMS module version currently in use
- Older ERP versions that are nearing end-of-life that impact the options for deploying the WMS module or rolling out new WMS capabilities
Performance is certainly part of the equation. This includes meeting key business needs in a cost-effective and reliable manner. How are key operational metrics performing over time? What is the true cost of ownership for the WMS module? How quickly can new features and capabilities be deployed? Are system service disruptions beginning to cause customer service problems? Sub-performance isn’t necessarily an indication that the existing WMS module needs replacing. However, if it is significant, it may suggest that it is time to assess the ability of the WMS module to support the business.
There is a natural hesitancy for a distribution operation using their ERP vendor’s WMS solution to question its suitability. In all fairness, this hesitancy isn’t restricted to WMS solutions provided by ERP vendors. Any organization using a WMS from a pure-play WMS vendor or supply chain suite provider is likely going to look to the incumbent system first when faced with the above challenges and performance issues. But this hesitancy tends to run deeper with ERP WMS users. It can even extend to organizations that have yet to deploy their ERP’s WMS solution.
Part of the allure of purchasing a large footprint ERP suite is to have a single enterprise platform maintained by common toolsets and a technical stack that is free of the need to integrate disparate applications. There are distinct advantages to reducing the software vendor and systems integrator landscape for many organizations. These advantages can provide reduced ownership costs, increased reliability, centralized support and improved responsiveness in certain situations. But these benefits may be illusionary for some organizations when it comes to an ERP WMS module.
Twenty years ago, the lines between WMS vendors and ERP vendors with WMS modules were clearer. The ‘best of breed’ packages offered by WMS vendors were viewed as functionally superior to the solutions offered by the ‘best of enterprise’ ERP vendors. But the latter offered lower ownership costs and out-of-the-box integration for their WMS modules. Today, the dividing lines are not so clear. Some ERP WMS modules stack up well against competing WMS vendor offerings. In fact, they may be overkill for some distribution operations, resulting in higher ownership costs and more complexity than a competing non-ERP offering. Web services and the cloud make the prospect of supporting and integrating a third-party WMS solution to other enterprise applications cheaper and more robust. ERP vendors have also become more nuanced in how they support distribution operations. Some offer multiple WMS modules with each solution targeting specific operation sizes, complexity and automation footprints, and industry verticals. Others have robust third-party WMS partner ecosystems while continuing to invest in their core WMS solution.
When faced with significant changes or performance issues, any organization using an ERP vendor’s WMS product needs to consider doing a full assessment of the warehouse system needs. This doesn’t mean that replacing the WMS solution is warranted, but any organization that elects not to do an assessment in these situations does so at its own peril. Staying with the wrong WMS solution will have a negative impact on the bottom line and can:
- Jeopardize the business objectives that an organization seeks through a new automated distribution center
- Hamstring efforts to support business growth and new service lines
- Result in higher system ownership costs and less responsiveness to meet new business needs in the long run
- Blow out deployment timelines
The effort and cost involved in doing an ERP WMS module assessment is minor compared to the risks involved in not doing one. But when faced with complex changes and performance challenges, doing a proper assessment requires specific skills. Any assessment needs to be based on current and future requirements. However, these requirements will cut across multiple organizational entities. They need to account for operations, business, facility design, IT and investment needs. They can also conflict with each other.
Determining the best path forward requires balancing and properly weighing requirements. This is difficult to do not only from a skill set perspective, but also because internal organizational biases and preconceptions may not be easily overcome. The best internal business analyst or manager may not be able to set aside their inherent view of how things should work based on their organizational role. Bringing in an outside consultant to help facilitate the process can help overcome these natural internal biases and preconceptions. Making a modest investment in doing an ERP WMS assessment can pay huge dividends downstream regardless of the final recommendations and directions. If the results are to leverage the ERP solution, then the assessment can provide a blueprint for how to get the most out of this offering to meet current and future needs. If the results indicate that a replacement is necessary, then the assessment can provide a foundation for selecting a next generation WMS.