How to Determine if You Need a Warehouse Management System

When catalog order management systems were first developed in the 1970s, they were designed to manage all aspects of catalog operations: from order entry, customer service and customer database management to response analysis, inventory management, purchasing, fulfillment, and returns.

Thirty years later, they still are, which is why so many direct merchants can run their businesses on these applications without a need to add specialized solutions for things like warehouse management.

Some companies, however, find their catalog management systems don’t provide the flexibility or sophistication they need to address their inventory or fulfillment challenges. For them, a warehouse management system (WMS) is a necessary investment.

Of course, your decision to acquire a WMS may not be driven by a goal of greater efficiency, but by sheer order volume. When you’ve reached the point where your order management system simply can’t handle the movement of inventory required to support order volume in a timely fashion, there’s a WMS in your future.

Benefits of a WMS

The most common benefit of a WMS is the management of warehouse automation. If you want to employ pick-to-light, carousels, automated picking or complex conveyor and gate/diversion management, you likely will need a WMS to do so. The same goes for radio frequency (RF) workforce management with handheld or truck-mounted units. Though many catalog management systems support RF devices, a WMS may be better suited for the job.

Another major reason for implementing a WMS is improved space utilization. This can range from directed or random put-away to more sophisticated slotting, which optimizes SKU placement in your warehouse based on turn velocity.

Supply chain management also may dictate a WMS for handling advanced shipment notices (ASNs), supporting electronic data interchange, taking full advantage of supplier-generated, case “license plates” or supporting radio frequency identification.

Even creation of good, old-fashioned, item-level barcodes or bin labels may be better done with a WMS than with a catalog management system.

Some other compelling reasons to acquire a WMS:

* You need more flexible or complex kitting and assembly functions than you currently have.

* You require more options than you have for cycle counting.

* You need a greater range of picking options (e.g., wave, zone, consolidated).

* You must do retail (bulk) distribution, as well as direct-to-consumer fulfillment.

* You have trouble managing cross docking for back-order fulfillment (picking at receiving without item put-away).

* Or your current system can’t provide the workforce management and productivity tracking tools you need.

Slotting Issues

I noted previously that slotting is a major reason for acquiring a WMS. There are a number of ways to approach this, all of which address optimizing the location of items in the warehouse based on A/B/C velocity tracking.

Of course, optimization can apply to many aspects of warehouse management, including put-away, storage, picking or a combination of these factors. The challenge can be so complex that there actually are separate slotting systems you can acquire to handle the task. But most WMS applications support slotting as part of their suite of functions, and it’s certainly one of the biggest benefits of investing in such solutions.

The real challenge for slotting is to provide a way to manage a multitude of variables in constant flux. (Slotting is one of the more focused sub-disciplines of warehouse management.) A slotting tool should allow you to do the following:

* establish, define and manage warehouse zones;

* assign item, package or pallet types and sizes by zone or location;

* use assigned random put-away;

* optimize picking locations by item demand velocity and assign A/B/C velocity codes;

* minimize picker travel distances, and balance these with put-away travel distances;

* assign items to multiple locations;

* optimize carousel bin assignments (including assignment of an SKU to multiple bins); and

* report on workforce efficiency on a user-designated basis.

Logical Disconnect

One message of caution here: Whatever theoretical payback you calculate for a WMS, you must take into account the challenges you’ll encounter in implementing and integrating the WMS into your current systems architecture.

It’s an unfortunate fact of life that getting a WMS to function in sync with an order management system, in particular, can pose daunting challenges, because the logic used in any given WMS may not be consistent with the logic of any given order management solution.

For instance, line-item allocation: Is an item on an order allocated when the order is entered, picked, packed or shipped? When it’s allocated, is it a “hard” or a “soft” allocation? What about back-ordered items? How do you deal with cancellations?

Among the various order management systems, there’s no universal standard by which line-item allocations on an order are processed. So expecting a WMS to automatically match the way your system currently handles this is unrealistic.

There’s greater danger lurking in the way orders themselves are defined. Many systems handle orders with multiple line items as a single grouping of multiple lines, while others treat each line item as a separate entity tied together by the order number. This can have a significant impact on the way an order is picked, packed and shipped, particularly with multi-line orders that don’t ship complete and entail multiple back-order shipments.

Not every mismatch in the logic of the two types of systems can be anticipated in advance. Only careful testing using multiple inventory management scenarios can reveal them all. And some unanticipated modification of either the WMS or the order management system may be required to get the two systems in sync. The industry is haunted by horror stories of companies that encountered massive problems in the hectic holiday season,

with tens of thousands of orders unshipped, double-shipped, incorrect and every other conceivable kind of fulfillment mistake — all caused by a failure to get the order management system and the WMS integrated properly.

Systems

In evaluating any WMS, be sure it’s designed to handle a daily profile of orders that includes something like 10,000 two-line orders, rather than just 200 100-line orders. Both require getting 20,000 line items out the door, but the former is a true picking-and-packing challenge, while the latter involves moving case lots and pallets instead of “eaches.” Note: This may be the biggest issue in selecting the right WMS.

Dozens of WMS applications are available. The following (listed alphabetically by vendor) tend to be the most widely adopted within the direct commerce, multichannel fulfillment environment.

* Highjump (www.highjump.com) is a Web-enabled solution installed at companies like Fingerhut, Overstock.com and Sportsman’s Warehouse. In addition to pick-pack fulfillment, it’s used for retail distribution, containerization and, in the case of Sportsman’s Warehouse, adhering to the Bureau of Alcohol, Tobacco, Firearms and Explosives’ requirements to track serial number, manufacturer and model of firearms during receiving and shipping.

* Integrated Warehousing Solutions, the IRMS system (www.iws-irms.com), includes interfaces to Ecometry, Sigma Micro, Synaro/Island Pacific and many other order management and enterprise resource planning systems — a big plus.

* Manhattan Associates’ Warehouse Management (WM) and WM for Windows (www.manh.com) include full suites of warehouse management and logistics solutions, which now support Web services on a powerful new Windows platform. Users can expose key application components and data as Web services to share with other systems.

* QSSI, PowerHouse WMS (www.qssi-wms.com) is a Windows-based solution that integrates with Great Plains Software (installed at The Museum of Modern Art, among others). Also available: ePowerHouse (browser interface) and PowerHouse FastTrack, a scalable entry-level version.

* Radio Beacon WMS (www.radiobeacon.com): With a browser interface, it runs on SQL/Server and integrates with Great Plains, Axapta, Navision, Best Software and Macola accounting packages. It can support up to 100,000 order lines per day.

* Though less widely installed in high-volume, pick-pack, direct commerce fulfillment environments, you might also consider systems from other vendors such as LIS, Logility, RedPrairie, Swisslog, and Tecsys.

Functional Checklist

To help you evaluate which warehouse management system (WMS) will best suit your needs, the following is an abbreviated checklist of features and functions on which to focus:
- support for multiple divisions, companies and warehouses;
- product storage types supported;
- value-added management (e.g., personalization, gift cards, gift wrapping);
- material handling equipment supported;
- flexible quality control functions (receiving, picking, packing);
- multiple SKUs per location, multiple locations per SKU;
- advanced shipment notices (inbound, outbound);
- planned and unplanned receiving;
- vendor performance tracking;
- support for electronic data interchange;
- radio frequency support (what type, which functions);
- radio frequency identificiation support;
- barcoding symbols supported;
- package labeling;
- random, directed put-away (with “top-off” capability);
- slotting management, space usage evaluation tools;
- pick batch functionality;
- picking methods supported;
- replenishment methods;
- demand tracking and analysis;
- warehouse transfers;
- virtual warehouses;
- kitting and assembly;
- work-in-process tracking;
- back-order management;
- cross docking;
- inventory consolidation;
- hazmat management;
- manifest interfaces;
- rate shopping;
- packing list, shipping label options;
- logistics management;
- shipment tracking;
- returns handling;
- item disposition, liquidation;
- return to vendor;
- productivity analysis;
- activity-based costing; and
- reporting tools and flexibility

Many WMS applications on the market offer the option of a browser interface, which allows you to support authorized access to the system from remote locations via the Internet. This can add significant value to your WMS investment.

Ernie Schell is the president of Marketing Systems Analysis, Southampton, Pa., and author of “The Guide to Catalog Management Software.” Contact him at: (215) 396-0660, or e-mail ernie@schell.com.