Published October 26, 2021
Properly done, a systems assessment can be the first step in addressing challenges and issues that are impacting the performance of a WMS solution. These challenges and issues can be current or future such as poor customer service levels, high labor costs, peak season levels or new business requirements. They can impact both operational and WMS ownership costs and can be generated by business changes, growth, an aging software platform or missed opportunities during the original WMS implementation.
A WMS assessment is a strategic tool that identifies possible actions and directions concerning existing features and capabilities, internal support practices, prospective enhancements or a potential replacement. It can be a standalone initiative, combined with an operations and material handling evaluation, or part of a larger supply chain systems assessment. While the effort that goes into a WMS assessment can vary based on the size and complexity of the distribution operations, most are completed within a couple of weeks when done as a standalone initiative.
The key deliverable from most WMS assessments is a set of recommendations. While actionable, these recommendations generally require additional work to further detail or justify the course of action before deployment. This work can entail compiling comprehensive requirements, developing detailed design specifications or performing a full-blown ROI analysis. The results of this additional work may very well change the nature and direction of the assessment’s recommendations.
So what goes into a successful WMS assessment? While the details will depend on the distribution operations and drivers behind the assessment, below are several common elements:
- Actionable Goals. An assessment should start with a short set of goals that reflect its drivers. These can be everything from the inability to meet peak season demand to a WMS version that is nearing end of life. They may include reasons beyond the current boundaries of the existing WMS such as a new highly automated distribution center, recent acquisition, other supply chain systems or an ERP replacement. They should account for future growth as well as current needs. It should entail the expected planning horizon for the assessment.
The goals should be concise and represent a starting point that can be further refined during subsequent steps of the assessment. Whenever appropriate, they should reference specific metrics or targets, even if they are high-level estimates.
- Realistic Expectations. All involved parties need to be aligned that the end result will not solve the problems or challenges that caused the assessment but will identify possible next steps for resolution. This doesn’t mean that it won’t identify some low-hanging fruit, but it also means that any preconceived expectations on recommendations may not come true. Timing also needs to factor into expectations. A WMS assessment to address peak season challenges will likely not produce desired results if launched two months prior to the start of peak season.
- Assessment Team. While a directional strategic systems assessment doesn’t need a large project team, the team composition will be critical to its long-term success. Key members should include WMS stakeholders that can help advance any recommendations through the approval process. This includes a champion who will have prime responsibility for moving the results forward as well as one representative each from operations and IT. If available, the team should also include a business analyst or industrial engineer familiar with warehouse operations and WMS technology.
Input from other WMS users, support resources and stakeholders can be solicited through interviews and review meetings. Depending on scope and drivers, this list may be expanded to include customer service, finance, procurement, transportation and other departments. If one or more key assessment drivers emanate from an external department, it may be appropriate to include a stakeholder from that department on the core team.
Many distribution operations will benefit significantly by retaining an outside consultant with a proven track record to assist in the assessment. This is especially true if the organization doesn’t have the internal resources available to do the necessary legwork. But more importantly, there is considerable value in bringing in a qualified outsider even if an internal business analyst is available. An outside perspective on WMS best practices can help balance internal views on how things should be done.
- Data Review. An assessment shouldn’t dive into the data analysis weeds. Detailed analysis of operational data and WMS configuration should be done as needed in subsequent phases. However, a high-level data review consistent with the goals and timeline is warranted. This should include the operational basics such as daily receipts, outbound order profiles, inventory turns, outbound shipments and warehouse staff levels and costs. It should also cover existing operational metrics and key performance indicators.
WMS configuration data can include putaway, inventory allocation, task creation, picking and shipping rules. If available, design documents and configuration guides from the original implementation and subsequent upgrades can be useful as a baseline. Historical WMS ownership costs including software maintenance, enhancements, infrastructure and internal support resources should be available.
This review should also detail key growth assumptions that impact the assessment goals and scope. Typical components include orders received, orders shipped, SKUs and inventory turns that come from existing planning processes. They can also include known events and milestones such as a scheduled replacement of the ERP platform, new regulatory requirements or plans to open a new distribution center.
Once again, the data review process for an assessment should be relatively short and generally take only a handful of days. Any desired data points that are missing or not readily obtainable can always be addressed by observations and input from the user community.
- Observations and Input. Challenges and performance issues surrounding WMS usage need to be fleshed out through end-to-end observations. This process should touch all current and potential WMS-related operational activity soliciting input from key users. It also needs to review IT support processes and structures.
This is an extremely important step even if the assessment is done without the assistance of an outside consultant. While internal assessment team members may believe that they have a handle on WMS performance issues and challenges, there are always new details to be garnered and existing aspects that require clarification. This step gives the WMS user community an active voice in the process.
- Alternatives and Options. This process details potential alternatives, options and directions for consideration based on the previous steps. These can address specific WMS processes and needs or they can entail larger, more strategic efforts such as replacing or upgrading the current solution. Each one should be summarized by its type (e.g., configuration change, software enhancement, selection and implementation, etc.); dependencies (e.g., facility/material handling automation improvements, business practice changes, external systems integrations, etc.); and perceived complexity, deployment timeline and cost (e.g., low, modest, high, etc.). The goal is not to produce an exhaustive list with many candidates failing to get any traction upon further review. Rather, it is to produce candidates that at initial glance appear to have promise in meeting the defined goals and objectives.
- Recommendations. Once compiled, the alternatives should be reviewed and vetted by the entire assessment team. The results should not be a rubber stamp of the alternatives and options previously compiled, and they do not need to recommend only one course of action. Further analysis may be required to determine which set of recommendations to deploy. This is especially true for the more costly recommendations. An assessment can recommend that a WMS solution should be replaced and provide a rough order of magnitude cost for its replacement, but it will not detail comprehensive requirements, establish a business case or identify the best fit WMS vendor. This will need to be done through a follow-up project.
- Next Steps. Once finalized, the recommendations typically need to be assembled into a document that can be presented to executive leadership for approval. This assessment report should summarize by recommendation the challenges and issues addressed, potential benefits, perceived risks and complexity, rough order of magnitude costs, and estimated deployment timeline. It should clearly define the next steps for each recommendation. Depending on the results, displaying these next steps in a roadmap format that identifies what to do now, next and later may be appropriate.
There are times when a WMS assessment is not needed. If new material handling automation is scheduled to be deployed, or a new business line with new services is being launched, it may be more appropriate to move right into detailed design. If an aged legacy WMS must be retired due to inability to support or operate its platform, then the best starting point may very well be a WMS selection. But if the potential directions aren’t limited then an assessment is a necessary first step. It provides a cost-effective forum to examine relevant alternatives. The big picture needs to be defined first. If it isn’t, then the risks of pursuing a sub-performing path increase significantly.