Business success means staying efficient and agile. As supply chain digitalization evolves, warehouse management strategies must adapt at pace or leapfrog into the present day to keep up. With that in mind, no one should think that implementing a cloud-based WMS is a simple tech update. Instead, it’s a business-critical upgrade for any company that wants to survive and thrive.
Whether your organization has kept pace or you’re behind the curve, there’s a lot to consider when transitioning from on-premises to cloud-based WMS.
Why Is Change Necessary?
The traditional (a.k.a., on-premises) WMS has long been the backbone of warehouse operations but has limitations. For example, many companies find that outdated technology prevents easy connectivity and compatibility with other quickly advancing supply chain systems. Change and improvements can also come slowly for on-premises systems, leaving companies far from the leading edge of what a modern WMS can offer in terms of scalability, visibility, and accuracy.
The demands on warehouses are greater than ever in terms of maintaining the ability to accommodate fluctuations in demand and shorter lead times. At the same time, companies must remain focused on streamlining inventory levels to avoid stock-out situations while minimizing inventory carrying costs and storage expenses. Balancing and managing these oft-conflicting objectives requires modern and connected systems that offer warehouses visibility and access to critical data to empower informed decision-making.
A cloud-based WMS also offers financial benefits. With a cloud-based WMS, businesses eliminate much of the upfront and maintenance costs of a traditional WMS, not to mention eventual investments in upgrades as they grow. Since most cloud-based systems operate on a subscription-based model, many extra system-related expenses decrease, allowing companies to utilize their resources more efficiently.
Transitioning to a cloud-based platform will not be without hurdles, however. Companies often have concerns about the implementation and data migration, as well as the security of sensitive data existing on external servers and networks. To safeguard against potential threats in a new digital environment, any plan needs to prioritize robust security measures, such as encryption protocols, stringent access controls, and regular security audits.
Before Making the Move
Careful planning and consideration are important for a successful transition, implementation, and execution. For obvious reasons, choosing the right cloud-based WMS partner is the most important first step for companies deciding to upgrade.
1. Determine WMS Provider’s Reliability
Evaluating a cloud provider’s reliability is an excellent place to start.
Security measures are an important component of a provider's reliability. Every business should thoroughly assess its track record when protecting customers’ data and look for certifications like SOC 2 or PCI DSS compliance.
2. Evaluate Service Level Agreements (SLAs) and Features
Next, inspect their uptime and system redundancies. Unplanned downtime will disrupt any warehouse operations with the potential to create a lot of extra expenses and lost revenue. Evaluating a potential provider’s Service Level Agreements (SLAs) to understand their uptime guarantees and disaster recovery plans should be part of your initial conversations. It’s also prudent to consider a provider with geographically redundant data centers — this ensures availability even during a regional outage.
3. Ability to Scale with Your Business
Part of your choice in a new cloud-based WMS should be its ability to accommodate your company’s future growth in terms of inventory levels, order volume, or even product line expansions. It is shortsighted not to emphasize finding a scalable solution that can adapt to your evolving business needs without requiring a major system upgrade. The good news is that modern cloud-based systems are constantly innovating and adding new features, so finding a provider firmly committed to ongoing development is possible.
4. Determine the Total Cost
Finally, you need to understand the total cost of ownership. There are almost always costs that go beyond a subscription fee that are different based on the provider. While a cloud-based WMS typically involves fees based on usage and storage, there’s a bigger picture to consider — factor in potential migration costs, data transfer fees, additional user licenses, and ongoing support charges. Remember that the pay-as-you-go model means a business can scale storage and processing power up or down as needed.
Best Practices for a Smooth Transition
Migrating to a cloud-based WMS can present a golden opportunity to streamline operations but will also require careful planning, execution, and ongoing optimization. To ensure a seamless migration, there are several best practices you should adopt.
1. Use a Phased Approach for Implementation
A sound recommendation for more companies is to use a phased-in approach. The implementation should be incremental — meaning data and functionality should be migrated in stages. Critical functions should be prioritized, which will minimize disruption to warehouse operations and give you time to identify and address any unforeseen challenges and risks. Doing so also allows for more thorough testing and validation of each stage before proceeding.
2. Arrange Adequate User Training for Your Staff
Don’t forget the staff members who will use your new system. Ensure they’re adequately trained since the successful adoption of any new system will rely heavily on the knowledge and proficiency of users. Successful implementations occur when companies invest in comprehensive training sessions across all levels to ensure everyone understands the system, its capabilities, and how it will impact them. And training shouldn’t be one-size-fits-all; it should be tailored to the specific needs of different user groups.
3. Constant Monitoring of KPIs
Once your migration is complete, you will always need to monitor your new system. Track KPIs such as picking accuracy, order processing times, and inventory levels so you can identify areas for improvement. The need to constantly analyze the data and look for opportunities to find and optimize workflows or configurations doesn’t disappear with a cloud-based WMS, but it definitely gets easier and more effective.
Staying on the Leading Edge
Depending on where you are starting from, the shift from on-premises to a cloud-based WMS may be a small step, a pivot, or a giant leap. Regardless, it represents a strategic move towards operational efficiency, scalability, and digital transformation. It’s also a way to save money and gain competitive advantages. Logistics and supply chain professionals who want to simplify the shift and position their businesses for future growth and success must embrace the move with a strategic, informed, and proactive mindset.
Ninaad Acharya is CEO and Co-founder of Fulfillment IQ.
This article originally appeared in the May/June, 2024 issue of PARCEL.
