How to Choose a WMS? 9 MUST DOs to Select a Warehouse Management System

On this article, I’ll share everything you need to know to successfully select the right warehouse management system for your business. There are so many details to keep in mind that it’s easy to lose sight of the core purpose you’re trying to achieve.

  

  

What is a Warehouse Management System (WMS)?

  

A Warehouse Management System (WMS) is software that defines wide range of laid-down rules, regulations, policies, and principles that aim to make the warehouse operation organized, precise, and accurate while achieving its goals and objectives.

       

    

The WMS enables close monitoring of every unit, creating a balance between the demand and supply chain, providing factual records, increasing productivity, optimizing expenditures, and enhancing customer gratification and data.

    

However, irrespective of the warehouse management system, the success of the warehouse is directly proportional to the storage solutions of employees and the system application.

     

A good WMS is the hearth of a performant automated warehouse. 

         

There are varying factors to look out for when selecting a Warehouse Management System: one that aligns with the goals of the warehouse, that will help implement the warehouse objectives and lead to achieving them, and at the same time, improving company records.

 

 

   

  

9 steps to select the right Warehouse Management System (WMS)

  

1. Define your current situation and if you need a WMS
2. Recruit WMS selection team
3. Identify your future requirements
4. Define other systems to be connected to your WMS
5. Identify the required reporting capabilities
6. Money: Define your Budget, ROI and “Time to Value”
7. Issue a Request for Information
8. Nego: RFQ and Supplier Selection
9. Implement and improve

 

1. Determine if you need a Warehouse Management System

    

  

Before doing anything else, you want to ensure that your warehouse management system will provide sufficient return on investment.

 

Such systems are good for nearly every business’ bottom line, but not universally so.

  

Besides, clarifying the issue will help with decision-making.

  

 

 

Once you’re confident you’re making a sound business decision, you can move forward with purpose. 

 

Two overarchign variables decide the financial sensibility of investing in a warehouse management system:

 

• Scale: Bigger warehouses and warehouse networks often benefit from effective warehouse management systems.

 

• Complexity: Complex operations (common in e-commerce heavy warehouses and niches with complicated products) can benefit the most from a good warehouse management system.

 

The classes above can be somewhat ambiguous, so a simple way to measure whether or not you need a warehouse management system is to look at the number of employees you have been bringing on or feeling a need for.

 

If you’re constantly expanding your labor force to fill demand and maintain operational efficiency, there’s a good chance you’d benefit from a warehouse management system. 

 

Before shopping for a new system, ensure that you’re maximizing the systems you already have in place.

   

 

 

There might be more potential in what you already have inhouse. Some of your third-party providers may also have something to offer in this area.

 

Max out the gains of what you already have before shopping around.

  

2. Define a team for project definition and vendor selection

  

  

In most cases, you’ll want to get together qualified team members to take the analysis and apply it to the search for the right vendor.

 

Companies often naturally assume that because this is a software question, it’s a task well-suited to the IT department, but that’s usually a mistake.

 

The people who will really understand the operational needs and details are going to be your business managers. They know the workflow. They see the bigger picture. There may even be a team already in place (such as a supply chain management team) that would serve this purpose well.

 

 

 

Perhaps IT will be helpful in determining how existing systems are positioned for a given vendor’s services, but the broader perspective needed is more suited to a business management team.

  

It could be also a good  idea to consult some external advisor to bring fresh ideas and new ideas to your team.

  

3. Determine what you need from a WMS System

   

 

 Every warehouse management system is different, just as every warehouse operation is different. For instance, a medical warehouse and a mechanical warehouse can’t use the same WMS.

  

You want to find the right complement for your business, which first means narrowing down exactly what your business’ priority needs are.

  

It helps here to break the warehouse flow down to their basic components to analyze how they benefit from a warehouse management system.

 

To that end:

 

Product reception: Warehouse operations begin with the reception of products from manufacturers. Warehouse management systems allow you to register and record incoming products quickly and accurately.

  

Product storage: Once the products are received, they are stored for a given amount of time. Warehouse management systems can help determine the most efficient locations to store the products and can provide fast, accurate records as to where things are kept.

  

Collecting products for distribution: After the products have been stored for the appropriate time, warehouse personnel locate and collect the goods to be sent to their next destination. Piggybacking off the previous point in product storage, a warehouse management system will help you locate the stored goods quickly to expedite the collection process.

  

Packing products for shipment: Once products are collected, they will be packed for shipping to customers. Warehouse management systems help the packing process with things like expedited record-keeping through quick scanning of outbound products and creation of uniform shipping labels.

  

Shipping product: Now it’s time to ship the products to their next destinations. This stage benefits from the accumulation of the previous ones—a streamlined process from reception to distribution. After the products are gone, a warehouse management system helps by maintining clear, extensive records of the goods that have passed through the doors. This is particularly useful in cases where products are lost or damaged en route. Clear records can save you a lot of trouble.

  

 

 

Generally, a good warehouse system gives you total knowledge of where everything in your warehouse is and in what condition. This allows you to make and execute decisions far more efficiently than you would be able to do otherwise.

   

With a clear view of the basic components of operation, it’s time to determine the priority needs of your particular warehouse. These can be:

 

• Cost reduction
• Boost cusomter satisfaction
• Collect operational data for analysis
• Expand operations
• Increase productivity and efficiency

  

4. Think of your WMS as part of a support ecosystem

   

  

There is this popular saying that no man is an Island. Warehouse management systems are rarely used in isolation.

  

Users usually connect them to other systems, even if they don’t exactly think of it in those terms.

   

For instance, you could use real-time feedback from customers to change the shipping schedule in your management system, effectively marrying your communications system with your warehouse management system.

Typically, WMS systems are connected with several warehouse automation solutions like for example: 

 

Automated Guided Vehicles

Autonomous Mobile Robots

Automated Storage and Retrieval Systems (AS/RS)

    

Some other systems you may want to anticipate connecting:

 

• Customs management systems: These are designed for businesses that import and/or export goods in international markets.

 

• Ecommerce systems: Composed of brands such as BigCommerce, Magento, and Shopify, ecommerce systems are essential in the modern age for warehouses implementing their own storefronts.

  

• Enterprise resource planning: These systems allow you to manage and automate processes like invoicing and payroll operation.

 

• Transport management system: These systems facilitate the flow of goods both inbound and outbound.

 

The key here isn’t to think of any particular items right now but rather to consider that your warehouse management system will likely be connected to a broader technology stack.

   

Depending on your requirements, tt is important that your WMS is able to communicate with different protocols like the VDA 5050 for mobile robots. 

    

 

 

5. Define Reporting Capabilities

 

The real value from reporting is the ability to see what is happening on the warehouse floor as it unfolds.

  

This serves as an information booth, displaying warehouse activities and aiding easy identification of any shortcomings.

 

The reporting system here can be a periodic analysis or forecasting curve which is made possible by the business intelligence solution of the WMS.

 

It accesses actions of the past, as well as every operation happening in the warehouse.

 

An acceptable standard WMS reporting system should be error-free with high resolution.

 

6. Money: Define your Budget, ROI and “Time to Value” 

  

The benefits and ROI of warehouse management systems take time to manifest. The range can be anywhere from months to years.

  

 

 

It’s good to go into the process with clear expectations, especially if the benefits to the bottom line take a while to come to fruition.

   

 

  

Determining these numbers relies on inhouse analysis by project managers but also numbers provided from the vendors you will be contacting about the issue.

 

A good vendor should be able to provide solid data and estimates on when you will see a positive return on investment. Their ability (or inability) to do so, in fact, should be part of your selection process (which we discuss in more depth below).

 

It’s rarely a good idea to go into discussions with vendors blindly on this matter. Do your own inhouse analysis. If there’s an extreme discrepency in the numbers, figure out if the mistake was on your end or theirs.

 

If it’s the latter, this might be a good reason to drop that vendor from consideration.

 

As you consider how the warehouse management system might improve your bottom line, calculate the following areas:

 

• Increased efficiency: With faster, more effective systems in place, you’ll be able to turn around more product and, if it’s consistent with your goals, less labor and equipment cost.

 

• Enhanced customer service: With greater record-keeping and control, you can serve your customers better, which is certain to increase customer loyalty and bring in new customers through word-of-mouth.

  

• Limit costs of errors: Increased accuracy in stock records reduces potentially expensive errors.

 

• Increased productivity: With better information, employees can be more effective.

  

• Insulate against costly customer issues: With improved records and tracing, you have a built-in insurance policy for cases where customers inaccurately blame you for missing or damaged products.

  

 

 

Calculate the potential gains against the potential costs of:

 

• Software purchase or licensing
• Training, project management, and support of the new system
• Continued cost of tailoring software and services to your needs

 

With these numbers in place and numbers gathered from the vendors for comparison, you can get a clear idea of your likely return on investment.

 

7. Request for info - Gather Information from Vendors

 

With your needs determined and your team in place, it’s time to start shopping for vendors. You can begin narrowing the field down effectively once you have in mind what your priorities are.

 

  

From that narrowed list, contact each of the vendors and request information. At this point, it’s generally best to cast a wide net. Prepare a request for information email or letter that includes your business’ name, needs, location, and goals.

  

 

 

Be clear on what you want from a warehouse management system. The information you want from the vendors includes:

  

• Cost of software
• Cost of training
• Cost of support
• Options for customization
• Terms of licensing
• Expected time to turn positive return on investment

  

8. Issue a Request for Quotation – First vendor analysis

     

  

After you get responses from the vendors your contact, cut out the ones who can’t clearly provide what you need. Now, with this scaled-down list, begin intensive research into each provider.

 

The temptation is often to go with the cheapest estimate, but that can be a myopic approach that ends up costing you more in the long run.

  

 

 

Any business’ best interest is in selling their services, so don’t rely only on the information the company provides.

 

Take time to research:

  

• Vendor’s history and appearances in the news
• Vendor’s financials
• Vendor’s current and past clients
• Vendor’s rates
• Origination of software source code
• Details of customer support
• Software development and upgrade expectations
• Vendor’s presence in your particular niche
• Details of formal commitement upon signing of contract

 

Ask the vendors for references and take the time to call those references. As the process deepens and you get closer to selecting a provider, you’ll may even want to visit those businesses.  

 

Sofware is never one-and-done. As surrounding technology changes, software has to change with it.

 

Remember that when you settle on a vendor, you are settling on a long-term relationship.

  

This may be a drag on time constraints, but you are getting into a long-term relationship with a vendor and need to get a personal feel for them. The meet-and-greet works best in two (possibly three) stages.

 

Bring the Vendors to Your Business

 

Extend invitations to the vendors on your list. Any who refuse the invitation, unless they have a reason that you find sufficient, can be scratched off.

   

 

As we’ve said, you’re entering into a long-term relationship here. This invitation is a good initial test for how far they are willing to go to serve your needs.

  

Have the vendor give a presentation and product demo. Bring in any personnel that you need to help in assessment (this may be a good time to bring in some of the IT department). As them to tailor the presentation to the particular needs you’ve already outlined.

 

Visiting the Vendors

 

Going to the vendors gives you a look at their own “house” and how well they keep it. You can get a human feel for how their team operates.

  

This is also a good time to get down to the nitty gritty and start the real number crunching. Ask the vendor to provide their best estimates.

  

At this point, you should have all the information you need to decide on the vendor and software that is best for you.

 

Narrow it down to two top choices (keep one in your back pocket in case there are issues with your top choice).

  

Legal analysis

 

Use qualified personnel (whatever that means to your particular operation) to review the legal documents and contracts.

  

Go through every legal document thoroughly. This is about 70% of why one must or must not choose a particular supplier, make sure there are no legal issues and make your investigations.

 

If anything is off, contact the vendor and straighten it out. Make sure all terms are understood and clear before proceeding. If something is seriously off, you may want to stop the process entirely and go to a different vendor.

 

Determine which terms you want to negotiate. Conduct those negotiations. Sign the papers.

 

9. Implement and Improve

    

  

There will be a training period as your staff incorporates the new warehouse management system.

  

 

 

Realistically, this can be a somehwat lengthy and painful process, but remember that it’s going to pay dividends (you’ve already crunched the numbers to assure this).

 

You’ll need to train administrative staff as well as the people on the floor. Develop a system to keep operations flowing as the new system is incorporated.

 

It’s nearly always best to phase the operation in piecemeal so that total chaos doesn’t erupt.

 

There are two general approaches to this:

 

• Train individuals in phases
• Phase in stages of the operations itself across the whole staff

 

You may be tempted to put pressure on people to make this work but remember that your staff is very likely to continue using old processes in response to that pressure.

 

If they feel threatened by their inability to reach a quota, for instance, they are likely to secretly keep using the old workflow.

 

Allowing them time to efficiently implement the new system is better for them and for your business.

 

In the end, it’s better the push the deadline than to push the people. Forcing incomplete adoption of the new system will only create bigger problems in the future.

 

You’ll want to assign people to monitor the unrolling of the new system and to record problems or needs for improvement in the software.

 

The terms of the feedback and improvement cycle should have been worked out ahead of time. 

 

   

Conclusion

  

With the information provided above, you are ready to decide upon a warehouse management system and to put that system to use.

  

Warehouse Management Systems help curb mishaps such as repeated operations, inappropriate warehouse arrangement or layering, disorganization of products, recurrent poor reviews from customers, mismanagement of labour funds, and unavoidable work accident.

   

For the functioning and smooth running of every warehouse, a Warehouse Management System should be adopted.

  

Most importantly, don’t rush an order to meet up with a deadline. What is worth doing, is worth doing well.  

 

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