1. Best Practices Consortium
Supply Chain
Best Practices Consortium
Warehouse Management Systems:
Current Practices and Trends
Executive Seminar
Track 2, Session F
September, 2006

2. Scope
This session covers the current state of warehouse management systems (WMS) technology, including identification of key pain points and opportunities from benchmark data, collaboration on underutilized functionality and reduction in long-term ownership cost.
Operational Efficiency: What factors drive efficiency within and across functional areas?
Internal and External Integration: What operational improvements can be derived from high levels of integration?
Visibility and Performance: How can the WMS be used to provide insight into operations improvement areas
Support Cost: What can be done to reduce the cost of implementation and ongoing support?

3. Current State and General Direction
What systems are being used and where are they going?
Which WMS do you use? (Weighted Response)
Developed in house 18
EXE 15
Manhattan Associates 7
Internally Developed - previously RGTI/BDM/TRW 6
Retek
HighJump Software Inc. 3
Red Prairie (McHugh)
Catalyst 2
HK Systems
Internally Developed - Stock Locator
Internally Developed - TPI 1
A surprising number of custom- developed solutions was found.
What is your strategy in the next 3 years regarding choice of WMS?
All
Retail
No changes planned
54%
61%
Change primary WMS software after going through a formal evaluation process
23%
22%
Standardize on primary WMS system, phase out the use of non-standard systems
17%
What is your strategy in the next 3 years regarding where your WMS is installed?
All
Retail
No changes planned
77%
75%
Move all software to a centralized system with all DCs connected through a communications network
18%
19%
Move to a hybrid strategy where each computer server and WMS installation supports one or more DCs 5% 6%
Move to a decentralized strategy where each DC has a computer server and a WMS installed 0% 0%

4. WMS Integration
Basic requirements of radio frequency (RF) communications and customer or store order integration top the list. Vendor inventory visibility and inbound event management were found to have very limited practical representation.
Is your WMS integrated with the following applications?
RF communications with handheld and lift truck mounted computers to direct activity and record updates
93%
Customer or store order management system for downloading customer or store orders
78%
Material handling equipment to control the flow of product in the distribution center
59%
EDI software (or web portal) for recording vendor provided inbound shipment updates (e.g. ASNs)
EDI software (or web portal) for transmitting updates to customers on outbound shipments (e.g. ASNs)
56%
Vendor order management system (replenishment) for downloading vendor orders
45%
Transportation management system for outbound shipment scheduling, dispatching and visibility
44%
Transportation management system for inbound shipment visibility and receipt scheduling
30%
Supply chain event management for door to door visibility on outbound orders
11%
Web portal for providing vendors with visibility to their inventory status and order activity 7%
Supply chain event management for door to door visibility on inbound orders 0%

5. WMS Satisfaction
In general, nothing alarming was discovered in the area of satisfaction. Initial and ongoing costs from the vendor are the highest perceived areas for improvement.
How would you rate your primary WMS on the following factors?
2 - Not
3 - Somewhat
5 - Very
1 - Not Sure
4 - Satisfied
Average
Satisfied
Satisfied
Satisfied
a. Ease of installation 9%
17%
17%
43%
13%
3.31
b. Flexibility to configure to fit your operations 0%
17%
17%
39%
26%
3.71
c. Breadth of features offered 0%
17%
26%
43%
13%
3.49
d. Ease of integration with order, transportation and add-on applications 4%
17%
26%
52% 0%
3.24
e. Frequency of software or documentation problems 0%
17% 9%
61%
13%
3.70
f. Access to vendor's support team
10%
19%
14%
43%
14%
3.32
g. Quality of support provided by the vendor's support team
10%
19%
19%
38%
14%
3.27
h. Initial vendor license fees and charges compared to similar alternatives
14%
14%
19%
38%
14%
3.21
i. Installation costs including initial customization
19%
19%
19%
38% 0%
2.66
j. Ongoing support charges from vendor
25%
15%
15%
40% 5%
2.85
k. Ongoing internal and third-party support costs
10%
20%
25%
35%
10%
3.15

6. Your Expectations What would you like to learn from this session?
Can I gain more operational efficiency? Can I gain better visibility into operational performance?
Can the WMS communicate more effectively with enterprise applications? With supply chain partners?
What are the major factors influencing inventory accuracy and reduced operational exceptions?
Can I leverage the WMS to better deal with peak volumes and exceptions?
How can I decrease the long-term costs of the WMS?

7. Potential Discussion Points
What are the key factors in achieving efficiency for receiving operations? What are the primary hurdles?
What it the best method of supporting vendor compliance measurement?
How can flow be systematically improved for putaway and replenishment activity?
How can the WMS align picking and shipping operations to increase flow and reduce bottlenecks?
What are the best methods for capturing operational performance metrics? Is additional software needed?

8. Potential Discussion Points (continued)
What information does the ERP hold that might benefit WMS- supported operations?
What is to be gained by real-time system integration? What are the obstacles?
How can the WMS further leverage vendor information to support inbound operations?
What improvement can additional RF-based capability have on inventory accuracy? Would other scan-based methods work?
What are the key factors contributing to exception handling within the DC operations?

9. Potential Discussion Points (continued)
What visibility would be required to assist the DC in handling peak volumes?
How could the WMS provide for better coordination across the DC operations?
If the WMS implementation cost could be reduced, what are the key areas?
What are the areas of functionality which are most costly in terms of ongoing support?
For packaged WMS software, will modifications be handled as core functionality in future releases?

10. Important Takeaways
While there are many interesting Benchmarking & Best Practices findings and discussion points regarding WMS, some of the more important are:
Functionality - Many operations do not get past the core functionality of a WMS. Expand past the basics to improve efficiency in areas which may be suffering.
Performance metrics - Few operations take full advantage of the storehouse of valuable operational data within the WMS. Investments in report writing and operational intelligence tools can pay big dividends.
Integration - The ERP and supply chain partners hold information outside of the obvious which can improve operational performance. Dig deep to ensure that nothing worthwhile is being missed.

11. Important Takeaways (continued)
Planning - Advance information from the business and from the outside allows for the WMS to serve as the dashboard to plan labor and space for managing through fluctuations in the operation.
Coordination - Lack of coordination among tasks can lead to under- utilized labor and un-synchronized operations. Using the WMS for visibility and coordination across functions allows the DC operations to consistently work as a cohesive whole.
Cost reduction - While few DCs can support operations without WMS customization, balance long-term upgrade alternatives with the productivity gains in charting initial implementation and upgrade plans.

12. Questions?

13. Benchmarking & Best Practices References
WMS Information can be found in the following references:
Reports and Analyses
Analytical Reports
DC Configuration and Basic Operations
DC Operations Overview
Warehouse Management Systems
Technology
Executive Seminar Presentations
Vendor Collaboration and Initiatives to Improve Performance
Supply Chain Technology - What is Working, What is Not and Where We are Going
Streamlining the Supply Chain - More Flow and Less Hold
Note: Available for downloading at