During the last twenty years the cost of warehouse automation has declined opening the door for small and mid-sized companies to take advantage of the technology and gain an edge over their competitors. However, a WMS purchase can be a complex task and, in truth, the failure rate for WMS (and their ERP counterparts) implementations remains high. Add to this a diverse landscape of WMS and barcode technology providers and the decision process can become daunting.
The emergence of barcode technology in the last half of the 20th century not only revolutionized the way that retailers sell products at the point-of-sale but also forever changed the dynamics of product flow throughout the supply chain industry. Today most enterprise and large manufacturers and distributors spend millions of dollars every year on improving their distribution operations with the goal of reducing costly errors, improving product rotation times and meeting customer expectations. There are numerous news articles and videos showcasing massive warehouse operations where product is automatically moved via conveyor and handling systems from receipt to shipping. At the heart of these systems is the foundation of barcode and scanning technology.
There are several steps that you can take to help prepare for making a WMS purchase decision:
Engage the End Users. Perhaps the most important first step you can take is to include the warehouse staff in the decision process. There are two reasons behind this strategy. First, change is often met with resistance and this is especially true if you are moving from a manual environment to an automated one. Engaging the end users makes them stakeholders for the project and helps reduce the tendency to resist change. Second, the users understand firsthand the current warehouse operations and can provide insight into possible problems during the selection process.
Document Your Current and Desired Processes. One of the interesting dynamics that management discovers in documenting their current warehouse operations is how little they really know. While your company may understand the need for WMS automation, taking the time to document your current processes helps to identify not only the known inefficiencies and problems but also the unknown ones. Begin with receiving and work through the entire flow of product movement within the warehouse. This effort should include a review of staff at each process as well as time spent on various tasks. Once complete, take the time to document improvements that resolve the identified inefficiencies. The goal of this effort is to help you identify WMS solutions that meet your newly defined goals.
Create a Clear and Concise Plan. One of the big mistakes you can make in taking on a WMS project is underestimating the impact of the project on your time and resources. Your project begins at the point when you consider the need to purchase a WMS solution and concludes hundreds of tasks later when the solution is successfully implemented. It is critical at the very early stages to create a detailed plan which includes timelines, known tasks, decision criteria, resource allocation, risks and key success factors. The plan should be reviewed and updated frequently by the entire team throughout its life cycle.
Prepare a Realistic Budget. A common issue we find during the sales process is a prospect often comes to the table with a king’s demand but a pauper’s budget. While value can be found, understand that the size of your WMS purchase investment coincides with the size of your wish list. The first step is to identify and prioritize which process improvements are most critical. Create an initial budget goal but also create three to five year budget goals. When going through the sales process find the balance between priorities and your budget. If you cannot achieve all of your priorities with your allocated budget, look at a long term budget strategy. Also, consider other financial options such as leasing or cloud based deployments.
Define a Realistic ROI. Your warehouse operations have costs associated with them. The inefficiencies in those operations are simply increasing those costs. So it follows that improving or eliminating those inefficiencies results in real cost savings. Admittedly, determining ROI is a subjective discipline but there are industry averages that can serve as a starting point for this effort. How much does a shipping error cost? How much time is spent searching for products? The financial impact of physical inventories versus cycle counts? The importance of determining a realistic ROI is the justification for doing the project.
Don’t Forget the Hardware. While hardware is an obvious part of any WMS purchase decision, if the decision is a part of a larger ERP project, sometimes the hardware element and its cost are forgotten. A typical WMS implementation will require a server and associated software, PC workstations, mobile devices (i.e. barcode scanners), wireless access points and associated cabling and label printers. Voice enabled capabilities are also popular.
Appoint a Proven Internal Project Champion. As you assemble your team, selecting a proven team leader with a track record of success is invaluable. This individual is ultimately responsible for the success of the project by managing your internal team and being the conduit for communication to the project vendors. He/She must also keep the project on time and on budget by avoiding the project killer – project creep. Most importantly, the project champion must believe in the project and its positive impact on the company throughout the life of the project.
Think Small Steps Rather Than a Big Leap. Success is more often achieved if you break your overall WMS objectives into smaller, more easily managed projects rather than one large, complex project. This is especially true for a first time move from manual to automated operations. Projects that require extensive customizations and complex interfaces into existing software and hardware are prime candidates for failure. Also complex projects drain company resources, weaken employee morale, experience delays and end up significantly over budget. However, by taking a complex project and breaking it down into a series of smaller projects or phases with obtainable goals, the ability to achieve success is greatly improved. More important, the company experiences a series of multiple “wins”.
Following points above will certainly prove beneficial to your company as you prepare to automate your warehouse environment and make a WMS purchase.
Chris Jackson and Jim Cawley