The warehouse concept is as ancient as Mayans keeping grain in a central storeroom. At the core, needs are simplistic: a roof, floor, shelves or bins - and, of course, the inventory. But, in today's digital landscape, where customer centricity rules and speed of delivery is essential, smart warehouse management can be elevated far beyond the basics to reach a strategic level. Applying analytics and modern supply chain principles can take it even further, turning the smart warehouse into a strategic differentiator. There's just one major obstacle. Many enterprises are trying to stretch the lifespan of outdated warehouse technology, hoping to make do with legacy software solutions. Such thinking can backfire. Let's examine why.
Outdated legacy solutions
Many see the warehouse industry as highly mature, already as advanced as needed. Although this is an outdated view, it's easy to understand why the warehouse is often overlooked when companies are looking for high-impact opportunities to improve profits or please customers. Rows and rows of bin locations and pallets simply are not as buzz-worthy as some other innovations competing for investment dollars, like 3D printing, back office automation, machine learning, or artificial intelligence.
So, when it's time to allocate resources, those other areas in the organisation planning transformative updates often move to the front of the line. Few companies can overhaul their entire IT infrastructures and operational processes, from automating invoicing to deploying chatbots, in one massive swoop. Enterprises must stretch funds and are faced with intense pressure to deploy digital technologies to remain competitive. Prioritising is difficult.
The warehouse team is often left to 'make do' with outdated technology, manual tools and labour-intensive processes. The company may be content to settle for basic solutions. But, the old-school approach to warehouse management is prone to errors and plagued with delays. Reports seldom reflect real-time truth, forcing some risk-adverse companies to increase safety stock levels for 'just in case' insurance. Disparate solutions may lead to major discrepancies about inventory status.
This uncertainty about which inventory report - or which interpretation of the report - is more accurate can lead to enterprise-wide decision paralysis. Department leaders, business unit managers and front-line personnel can find themselves embroiled in the minutia of tracking thousands and thousands of SKUs, subcategories, parent-child relationships and stages of readiness or repair. Once teams begin debating definitions of 'available to ship' or how merchandise should be returned to inventory, the team has become highly unproductive.
Stratification of the industry
While lack of productivity is important, there are two other bigger elephants in the room for enterprises with large, sophisticated warehouse and inventory management needs. One is Amazon. The other: Alibaba. Both powerhouses of ecommerce and smart inventory management have changed the standards for availability of inventory, speed of shipping, and the ability to anticipate and predict what customers want - sometimes before the customer even knows.
Organisations cannot ignore the impact, nor fail to up-level their responsiveness, if they want to remain relevant in the era of such giants. This is one of the reasons many forward-thinking, top-tier enterprises are turning to extended, networked supply chain solutions to help them add value for customers and streamline processes. Business intelligence is the key.
It is also the divisive wedge, some would argue. There is no doubt the warehouse management industry is becoming divided, with a large chasm between large enterprises representing the upper spectrum of warehouse needs and mid-sized companies with more modest operations, often classified as Level 3, or below. These smaller companies can often make do with 'good enough' solutions. At the opposite end of the great divide, though, the more sophisticated enterprises are looking for advanced features and innovations. Fortunately, some solution providers are answering the call, providing unique visions for solutions that combine the power of the cloud with supply chain network visibility and AI-driven smart warehouse planning and analytics.
The market for warehouse management systems
In the 2019 Gartner Magic Quadrant for Warehouse Management Systems, by C. Klappich and Simon Tunstall published May 8, Gartner discusses the division in the industry, saying:
This bifurcation finds that there is a very clear market for high-end WMS solutions where feature/function and performance are critical, and cost is less of an issue. This makes for a healthy, although smaller, market for high-end, functionally robust WMS solutions aimed at complex and sophisticated Level 4 and Level 5 operations.*
Infor believes companies are looking for networked solutions with the ability to apply predictive analytics, powered by artificial intelligence and machine learning, to anticipate trends, optimise the selection of suppliers, plan trade routes, and orchestrate the timing of deliveries to leverage smart cash flow strategies. In this era of tariffs and trade volatility, timing of shipments is critical. Whether a cargo ship arrives on the 1st or 31st of the month can have sizable bottom-line repercussions. Every decision counts.
In its report, Gartner commented on the current state of WMS systems, saying for example:
While a very mature market, WMS offerings continue to differ in areas like usability, adaptability, intelligence, scalability up and down market, and life cycle costs...
Furthermore, customers increasingly favour supply chain suites that can support end-to-end logistics process orchestration.**
What forward-thinking companies should seek in advanced solutions
One end-to-end solution. Choosing a solution with visual warehousing, labor management and an open API framework will enable the solution to scale, as needed, and reduce the need to add additional features or customisations, while paving the way for advanced warehousing capabilities. The solution should accommodate both business-to-business and business-to-consumer fulfilment from a single warehouse. This could involve reverse logistics as well.
Reliable data. Enterprises should pay close attention to data management. It's important to have a single platform solution for core and advanced warehousing functions, so that there is no data disparity. One solution should be able to manage cross-site inventory data, 3D visual analytics, and monitoring of the warehouse workforce.
Highly configurable. Flexibility in a warehouse management solution is essential as the enterprise grows and evolves. The solution should support a wide range of business-specific processes and constraints and enable users to focus on drivers relative to their organisation. Whether multiple distribution centres (DCs) or a single warehouse is necessary, the solution should scale, as needed, and be able to manage SKUs with parent-child relationships, small parts, large components, complex dependencies, items with short shelf-lives, common kitting combinations, as well as items that require special environmental conditions, such as controlled-temperature or low-humidity.
Contemporary UI. Today, warehouse solutions must provide modern interfaces, which include mobility, voice, and personalised radio frequency (RF) options. Forklift operators can be equipped with wearables and voice-activated solutions, so they can keep their eyes and hands focused on safe operation of the vehicle. A solution that is highly flexible is the often the best suited to manage the ever-changing needs of the warehouse.
Some organisations can stretch the life expectancy of their warehouse management solutions and make do with old-school functionality. Those companies may be content to remain middle-of-the-road suppliers for a specialised demographic. For companies wanting to grow, though, or achieve a higher level of sophistication, modern warehouse management solutions are a requirement. Today's advanced, end-to-end solutions help forward-thinking companies compete in the era of Amazon and Alibaba. They provide the analytics and augmented insights needed to see the future - and be inventory-ready.
* ** These quotes were published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document, including Garter's disclaimer of endorsements, factual accuracy and warranties. The Gartner document is available upon request from Infor.