This industry has matured significantly in the past five to 10 years and is experiencing some of the growing pains of the maturation process. There have been a number of consolidations, several public stock offerings, significant movement of people within the industry and, recently, a general softening of the marketplace due to the distraction of the Y2K issue. There has, at the same time, been considerable growth in the number and size of the major vendors from less than 10 in the mid 1980�s to hundreds today. A few larger WMS vendors boast revenues of $30 to $60 million while a very large number of smaller vendors have annual revenues well under $10 to $15 million each. The industry is dynamic, aggressive and it has its share of marginal operations with failed implementations as well as high-quality companies with great success stories. One indication of the maturing of the industry is the WMS product section of the Material Handling Industry of America (MHIA) that was formed about four years ago. These companies represent the diversity and dynamism of the vendors who are committed to a high quality marketplace with well-informed customers.
The WMS industry grows up
Warehouse management systems have been around since the 1970s, beginning as a no-nonsense solution to keep tabs on a conventional warehouse operation. These began as relatively straightforward systems custom-built for a specific warehouse. The basic problem of tracking material in a warehouse really isn�t all that complex. For many years, pencil and paper or cardex systems provided very adequate methods to track inventory in the majority of warehouses. However, when the problem becomes managing the inventory � and the people and the equipment � the WMS challenge becomes rather significant. The complexity grows substantially when truck routing, yard management, shipment manifesting and electronic data interchange are tossed in. Some of today�s systems go even further, including wide area networking, Internet linkage and full supply chain integration pulling in operational data across a large number of locations and inventories. All this functionality is commonly built on a foundation of sophisticated computer systems technology that places heavy demands on the vendors to maintain development and support expertise that goes far beyond the basics of the 1970s. It also places a demand on the customer to take over, operate and maintain these high complexity systems.
Yesterday�s WMS vendor had it relatively easy. The cost of entry into the market was essentially three steps; sell a custom warehouse control project, complete it and call the results a WMS package. Sales would begin to trickle in and the business could bootstrap from humble beginnings. Today, the WMS vendors who are doing it right have developed a true software product that requires limited customization on each project. Established WMS vendors are versatile organizations with savvy technologists, sophisticated development tools and a well-conceived customer support organization. More importantly, however, the truly successful companies have figured out how to implement projects in a consistently successful way. Today�s buyer of warehouse management systems should look less at software functionality and more at the company offering it. Do they have a coordinated well-conceived plan for implementing the project? Do they have the ability to integrate optional modules or complementary products with the basic WMS solution? Functionality has become more or less a given in most serious products so the differentiation between WMS solutions truly is the company and their process of implementation.
Where to from here?
Where is it all heading? What does the future hold for the users and vendors of WMS systems? While there is still room to improve on the capability of warehouse management systems, the fact is that most systems have adopted a fairly common set of functions creating a similarity that is remarkable. Principle differences lie in the computer hardware, operating systems and database platforms, which in turn impact on capacity and compatibility with other systems. There will be further development of capability but the real growth lies elsewhere.
The future of WMS systems lies in the hands of the project managers rather than the software engineers. As complex as it is to develop robust, reliable and versatile software, the greater challenge is to integrate that solution with the people, equipment, operations and other computer systems that typically comprise the modern warehouse environment. The WMS vendors who have established successful track records are those who have taken the project management side of the business very seriously.
A project needs to follow a plan to guide both the vendor and customer through the maze of definition, modification, piloting, implementation, configuration, training and �going live.� Without the right planning, WMS implementations may experience severe pitfalls and potholes before reaching their potential. The well-conceived plan can anticipate and avoid issues that will otherwise undermine the project. In order to get the most out of such a plan, both the vendor and the customer must be committed to making, and sticking to, the plan. That is the quickest and surest path to a successful system.
A major link in the supply chain
Nearly every warehouse is a part of a supply chain linking the activity of product creation with product consumption. As the supply chain becomes more and more integrated, the WMS becomes the central link with real-time, high volume interfaces to the rest of the supply chain. The WMS has always been, and continues to be, a major piece around which much of the supply chain revolves. The WMS has a unique role whose primary purpose is execution of material movement rather than simply planning or tracking. As the supply chain grows in complexity and end-to-end integration, the role of the WMS becomes ever more critical. A breakdown in timeliness, accuracy or reliability of the material movement destroys the integrity of the supply chain. These demands will drive the focus of WMS development toward ease of integration, reliability and performance more so than ever. Higher powered hardware, flexible middleware connectivity products, more powerful database features and high availability solutions are combining to make it possible to meet the stringent demands of the supply chain.
The future of the WMS business points to more capable systems, working more reliably, for lower per transaction cost, with tighter integration to the upstream and downstream
The WMS continues to be a major piece around which much of the supply chain revolvessupply chain linkages. That bodes well for buyers of these systems. However, in order to realize the full potential of those enhancements, customer and vendor must take on the mutual partnership to bring these projects to a routinely successful conclusion.
Ron Reimink is the general manager of Ann Arbor Computer, a division of Jervis B. Webb Company. Contact Ron at 734-973-7875, e-mail or visit its Web site at