In our increasingly digital economy, it is easy for consumers to forget that the products they buy without ever setting foot in a physical store are shipped from a physical warehouse or distribution center. There is, understandably, even less appreciation for the importance and complexity of warehouse management. Depending on the business, warehouse management can be enormously complex and technologically awe-inspiring. The most automated warehouses feature an intricately choreographed matrix of robots that is marvelous to witness.
The one thing all modern warehouses and distribution centers have in common is a warehouse management system (WMS). A WMS is a software application for managing and optimizing the warehouse’s operations, including such functions as receiving and putaway, inventory tracking, picking and packing, and shipping. More comprehensive systems can also include capabilities such as labor management, work planning and optimization, slotting, parcel management, yard and dock management, reporting and third-party billing, and logistics.
To briefly describe these functions and capabilities:
- Receiving is the process of delivering and unloading inventory.
- Putaway is a collective term for all the processes that occur between receiving a supply of goods from a vendor and having it stored away in the warehouse.
- Slotting is the process of organizing the inventory to make picking and replenishment quicker, easier, and more efficient.
- Inventory tracking enables the use of advanced tracking, automatic identification, and data capture (AIDC) systems, including RFID and barcode scanners, to ensure that items can be easily found.
- Picking and packing is the process of picking the correct type and number of items from shelves and packing them efficiently for shipping. There are various types of picking, including zone picking, wave picking and batch picking.
- Shipping is a series of processes that move items from the warehouse to the customer.
- Labor management helps monitor workers’ performance by using key performance indicators (KPIs) that identify workers who perform above or below standards.
- Yard and dock management helps truck drivers coming into a warehouse find the right loading docks.
- Reporting helps managers analyze the performance of warehouse operations and find areas to improve.
There are basically two types of WMS — integrated and standalone. An integrated WMS is one offered by an enterprise resource planning (ERP) vendor as an extension of a preexisting ERP system. The ERP part of the system manages invoicing, accounting, and inventory tracking, while the WMS part manages order intake and picking, as well as product receipt and shipping. With an integrated WMS, it is easier to perform financial analytics aimed at increasing profitability, such as restocking higher-margin items instead of items that sell well but at a low margin. While more limited in scope, a standalone WMS focused primarily on warehouse management will, by virtue of that focus, generally feature a richer set of functions and more robust reporting capabilities.
Modern warehouse operators are looking beyond basic warehouse tasks and placing greater emphasis on user experience and usability, responsive UI design, workflow management tools, process streamlining, visualization capabilities, and differentiated UX across users, as well as multiple interaction modes such as mobile, voice, and augmented reality. Other emerging technologies such as smart glasses and other wearables could further enhance WMS capabilities.
Increasingly, operators are also looking for more advanced WMS that can deliver real-time insight into warehouse operations and capabilities to enhance performance and throughput, operational efficiency, and decision-making through advanced predictive or prescriptive analytics, modeling and simulation, and machine learning capabilities.
The most advanced WMSs are able to support integration with material handling and robotics. Entire facilities can be engineered to support highly automated operations where software shifts the emphasis from people-centric WMS processes to material handling integration (WCS).
Over 100 DataArt engineers currently work with Ocado Technology, an online grocery disruptor that has developed the world’s most advanced end-to-end eCommerce, fulfillment, and logistics platform using advanced artificial intelligence, robotics, big data, the cloud, and IoT. Ocado’s warehouses are run by robots that move across a cubic grid where each square is a stack up to 21 containers deep. When an order is sent to the warehouse, the robots move toward the appropriate container, passing within five millimeters of each other. Armed with a grabbing mechanism, the robots can pick up one container each. The robots also move the finished orders to a van for delivery.
The Power and Benefits of a Custom WMS
Although a WMS can be complex and expensive to implement and run, organizations gain numerous benefits that can justify the complexity and costs.
Implementing a WMS can help an organization reduce labor costs, improve inventory accuracy, improve flexibility and responsiveness, reduce errors in picking and shipping goods, and improve customer service. Modern WMS operates with real-time data, allowing the organization to manage the most current information on orders, shipments, receipts, and the movement of goods.
Given the vital importance of warehouse management, a business’s WMS can confer a decisive competitive advantage or place the business at a perilous disadvantage to its competitors. This is especially true in a business like online grocery delivery, where fulfilling customer orders as quickly and accurately as possible is the name of the game.
DataArt recently partnered with a leading online grocer in Eastern Europe to develop a custom WMS. With growing, ambitious competitors hot on our client’s heels, geographic expansion and responsiveness to customer feedback became essential to capturing and maintaining market share. However, the company’s agility and ability to scale and innovate was hampered by the implementation of its in-licensed SAP enterprise warehouse management (EWM) system. Over the years, the EWM system became laden with around 80% custom code, making it clunky, heavy, and costly to customize and support. Another major drawback was the lack of cost-effective scalability, given that an additional license would be required for any new warehouse. With the planned opening of many new warehouses in the near future, the EWM would quickly become cost-prohibitive.
Our client’s CIO recalled how the COVID-19 crisis made the need for a new WMS even more urgent: “The market became very competitive as COVID-19 caused many offline grocery retailers to provide online delivery service. We thought of this as a positive change that would accelerate innovation and ultimately lead to better service for customers. However, we needed to scale fast to cover new geographical areas, and we needed a WMS system that would allow us to quickly and cost-effectively open new warehouses and introduce new business processes.”
The client examined a wide array of options, including an upgraded SAP EWM system and other “out-of-the-box” solutions at various price points. The company found that a lower-priced solution would not provide sufficient flexibility and that an upgraded SAP system or another, higher-priced solution would cost more than a custom-developed WMS. The company also wanted to escape dependency on out-of-the-box solution vendors and to retain core expertise in-house. All things considered, partnering with DataArt to develop a custom WMS emerged as the clear best option.
The CIO has been effusive in describing the business benefits of the custom WMS: “In this competitive landscape, anything that allows you to move faster than competitors is a valuable strategic asset. The custom WMS went into production within a year of hiring DataArt. We planned and hoped to run one warehouse on it, but we managed to significantly exceed expectations and have three warehouses running on the WMS almost by the same deadline. For a system that has only been operating for four months, it is very, very fast. Launching a warehouse every couple of months is unheard of in our industry. My colleagues in the market find it difficult to believe. I think that is a huge indicator of the project’s success.”
By developing a custom WMS, the client created a powerful competitive advantage and unleashed new potential for innovation and growth. As the CIO put it: “With our own solution, we are unconstrained by any vendor, their upgrade cycle, or their pricing policy. The system is highly productive, light, and flexible.” In addition to new potential for innovation and growth, the client has already realized a host of particular business benefits from the custom WMS, including:
- Increased facility throughput, overall performance, and efficiency
- Increased employee productivity
- Reduced maintenance costs
- Reduced warehouse operation costs
- Company-owned IP that can be licensed to other companies with similar warehouse operations
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