WMS: A Change Could Do You Good

After coming to the conclusion that your paper-intensive warehouse procedures and practices need revamping, you might want to turn to a WMS (warehouse management system) solution. WMSs are designed to control the activities and inventory within the four walls of a warehouse. WMSs come with different levels of functionality; and, depending on the size of the warehouse, the type of vertical market served, and the level of automation sought by the end user, prices vary. From a functional perspective, a basic WMS addresses the following warehouse needs: receiving, inventory management, picking, packaging, shipping, and rules administration. Within the WMS software suite, a specific application (called a module) is designed to manage each of the aforementioned needs.

Phasing In A WMS
The modules within a WMS can be implemented all at once or they can be deployed one at a time. The second approach, called a phased approach, is recommended more by analysts and WMS vendors, but there are a few drawbacks to consider first. "Taking a phased approach prolongs the investment payback period," says Tom Singer, principal for Tompkins Associates, a global total operations implementation and integration consulting company. "Also, you may find that phase two might never be implemented because everyone is just 'too busy' to get to the project."

While there are rewards to be realized by implementing a WMS in one fell swoop, there are more than a few horror stories about how businesses were nearly ruined by such an undertaking. "I recall a company that nearly went out of business after implementing a full-fledged WMS," says Ken Ackerman, owner of the K. B. Ackerman Company, a WMS analyst and consulting company. "Everything came to a head when drivers were left sitting at the loading docks, because the company couldn't get its system to print out the orders. A few people were fired over it, and the company got a bad reputation with some of its customers."

A phased approach is usually the better choice. Singer recommends a two-step approach. "First, you want to focus on your core tasks such as receiving, storage, replenishment, picking, packing, and shipping," says Singer. "After employees feel comfortable with phase one, you are ready for phase two. Phase two covers supplementary functionality such as task interleaving and productivity management."

Avoid These WMS Pitfalls
After deciding whether to take a phased approach or implement a WMS all at once, you still have to watch out for WMS traps. The first thing you want to check out is the service level agreement. Just because it seems like you're getting a good deal on the software doesn't mean that the TCO (total cost of ownership) is low. "Look for a 50/50 ratio - where 50% of the TCO is in the software licensing fee and the other half is in the services the vendor will provide," says Richard Sherman, chief marketing officer for V3 Systems, Inc., a WMS vendor. "If the service fees exceed the license fees, you'll need to take a hard look at the services provided." Because a WMS is a mission critical solution, be prepared to pay a little more to work with an operations consulting firm to determine the best way to implement your WMS, including choosing the right hardware and which modules will be rolled out first.

The second important point to consider is how much "tweaking" the system will need to adapt to your particular product or work environment. For instance, a company that warehouses air bag components or pharmaceuticals, which have strict government and industry controls, will need to build in extra checks and balances into their WMSs. "Tweaking the integration and configuration rules of your product is typical," says Ron Riggin, chief technology officer for MARC Global, a WMS solutions group. "But, tweaking the actual software to create a customer-unique version of your product can be risky and costly."

For instance, when you call tech support with a question, they have to get the one specialist that understands your system to try and help you. It's a classic case of putting all of one's eggs into the same basket. Besides the potential problems with tech support, future upgrades may become problematic because the vendor's latest upgrade to its WMS suite is not compatible with your tweaked version of the product.

The third important point to remember before implementing a WMS is to see the big picture. "Don't just look at your warehouse and figure out what system you need to automate your outbound and inbound tasks now," says Singer. "Instead, imagine what your warehouse will be like in a couple of years - what product mixes it will handle, what volumes it will support, and what value added services it will provide. For instance, RFID (radio frequency identification) tags or Web-based supply chain collaboration with key partners and suppliers may be in your future." So, you must question if the WMS product you're considering is scalable and can accommodate future needs. Unless you have no plans for future growth, you'll need a WMS that can grow with the business. Ask the WMS vendor to provide a list of references within your vertical market from similar sized companies.

The fourth point is a simple one but often overlooked. Don't forget about training. It's human nature to resist change. Keeping your employees in the dark about the new system will only add to their concerns and unwillingness to try something new. "With a WMS, you have to have everyone's buy in - from the top executive to the hourly employee," says Ackerman. "It's important to include positive reinforcement as well. If an employee shows improvement with learning the new system congratulate the employee."

Advanced WMS
Many analysts agree that enterprises should realize a full payback on their investment within 12 to 18 months of going live. To further capitalize on the benefits of warehouse automation, you may want to consider some advanced WMS components such as RFID, voice picking, ASP (application service provider) hosted WMS solutions, or task interleaving. Following is a brief description of each of these services and solutions to keep in mind.

RFID technology looks similar to traditional bar code technology on the surface, but it functions at a more sophisticated level. With RFID, each product or bin of products is tagged with an RF (radio frequency) tag. The tag, like a bar code label, contains information about the product such as ID number, SKU (stock keeping unit), and possibly even a description of the product. But, unlike bar code labels the RF tag can send and receive data, and can detect the presence of an RF reader. This makes RFID a hands free, non line of site technology that can automatically feed data to a WMS. Additionally, by using this technology, warehouse employees can positively identify highly regulated products. This is especially important for warehouses that handle pharmaceutical supplies or air bag components and must comply with strict government standards. A downside to RFID tags is that they are currently about 10 times more expensive than bar coding - about $1 a tag compared to $.10 a bar code label.

Voice picking is something we may hear more about in the near future. Instead of relying on a warehouse worker to key completed tasks into a PC or handheld device, voice technology enables hands free, uninterrupted work, which leads to higher productivity. The only major drawback is that positive product identification is lost, because the system relies on the picker to tell what items were picked. For similar looking bins, especially ones with small parts, there is the potential for picking errors.

Enterprises that don't have the capital to invest in a WMS should consider leasing a WMS from an ASP. ASPs not only handle the software licensing, they also oversee the operation of the system, which means that the company leasing the product doesn't have to hire a full-time computer tech to oversee the system. Because ASPs offer the solution over the Internet, no software needs to be loaded onto the end user's computer, making troubleshooting technical problems and performing software updates a breeze.

One final noteworthy process is task interleaving. By using backhauling techniques practiced by truck drivers, task interleaving enables warehouse forklift operators to lessen time spent driving the forklift by as much as 30% by reducing trips made with empty forks.

Debates will inevitably arise about which technology will revolutionize the warehousing industry (e.g. RFID, voice picking). But, before you choose sides on the solution of choice, keep this in mind: technology is only as good as the people that use it. If the people who should be using the technology don't use it - usually because of insufficient training - you may as well stick with pen and paper.