Lost in the Maze?

How to choose the right warehouse management system.

The choice of operations management systems can be confusing, even just within the area of warehouse management. Ruari McCallion picks his way through the maze, with the help of experts in this field.

Whether you have a bank of servers humming away somewhere off the office’s beaten track, or have a harassed warehouse manager with a spreadsheet and a pencil behind his ear, you have a WMS (Warehouse Management System). The question is not whether or not you have one: it’s whether that WMS is suitable for your business needs.

First, the generally accepted wisdom is that automated is better than manual, so a computerised WMS will be better than a manual, paper-based system – automatically, if you like.

Courting triumph, avoiding disaster

This is largely true but not inevitably. Key to a successful implementation, upgrade, evolution or renewal is processes that work. If they don’t, then all that automation will do is deliver disaster more quickly. More sophisticated systems will do it even faster, running the business headlong into chaos.

A too-sophisticated computerised system will overwhelm a smaller company, which doesn’t need the complexity that a medium-to-large OEM (Original Equipment Manufacturer) or retailer would regard as a starting point. It happens: a niche automotive manufacturer in the UK, a few years ago, was running an ERP (Enterprise Resource Planning) system onsite that required 120 people in its IT department; it only had 40 staff on the production floor. (The story has a happy ending: the company ripped out the ERP that was suffocating it and installed something more appropriate to its size, which was run by eight people).

Get the process right

Whether it’s a first step for a small manufacturer, an upgrade for an SME (Small or Medium-sized Enterprise) or a step up for a supplier securing or pursuing a new contract with an OEM or large retail customer, the first thing to do is ensure the processes are correct. The next is to assess and determine what a WMS is expected to do and how it will deliver it.

“The more advanced the WMS, the more it adds value by giving tools to the operators to execute the work.”

Pekka Paavilainen.

A clear picture adds value

The data collected by the WMS over whatever period – a day, week, month, quarter, year or multiple years – is available to any authorised personnel. Data gathered by manual methods is available only in one place and often to only one person. A supply chain can operate only as efficiently, accurately and as fast as the warehouse processes permit. If materials and goods inwards aren’t recorded properly, inventory levels will be a mystery, leading to interruptions in production flow and to more capital tied up in order to cover all possible ‘just in case’ scenarios.

A good WMS provides visibility into the organisation’s inventory at any time and at any location, both in the warehouses and in transit. If stock isn’t located accurately, so that it can be found and quickly dispatched to manufacturing or operations, there will be production delays and dispatch will be interrupted. It may be thought of as a humble function, but efficient operations really are built around an effective WMS.

All of which explains why the processes must be designed properly before automation and upgrading.

The WMS does not exist in isolation. It sits alongside and is, ideally, integrated into other systems, including ERP, logistics management, MES (Manufacturing Execution System), purchasing and inventory management.

“I wouldn't say that the warehouse management system is more important than the ERP for a smaller business, but when you get rid of the piles of papers you accumulate in a manual system you get to build productivity.”

Pekka Paavilainen

The right combination

“On the inbound side, you get a more accurate picture of what you have received. You can align it with your orders and more accurately confirm deliveries in the right quantities and schedule. An automated system will give you a better, more accurate and more up-to-date picture of what you have received. You will know exactly where everything is; you don’t need to spend time hunting for a ‘golden apple’ or a needle in a haystack; the warehouse management system will support the MES by giving an online, real-time picture of what is happening in the storage part of the operation.”

As is the case with all automation systems, merely plugging in a computer is not a magic bullet. The range of systems available extends from really quite simple to very complex. Which one is correct depends on the size and complexity of the operation. There is absolutely no point in an SME buying and installing a system that’s so complicated that it needs on-site IT support. It should be easy to use and scalable, to adapt to changing needs and demands as the business grows, without having to be ripped out and replaced with something new.

The arrival of the Cloud and SaaS (Software-as-a-Service), paid for on a subscription basis rather than as high capital investment, has brought effective automation and management systems within the reach of even quite small organisations.

Pekka concludes: “The right warehouse system will free up working capital and enable a leaner, more profitable operation.”