The warehouse is one of the most crucial locations in the supply chain. It serves as the joint that connects production with distribution and manufacturers with retailers. With the right software in place, warehouses will run smoothly -- and with them, the entire supply chain. The ways technology touches the warehouse, as well as the number and varieties of software options available to manufacturers, are growing with no sign of slowing down, according to a recent
ARC has been following and conducting an annual study on the state of the WMS software marketplace for the past ten years, according to Clint Reiser, research analyst for enterprise applications at the Dedham, Mass.-based technology research and advisory firm. Months of interviews and site visits with WMS vendors are used to create a comprehensive snapshot of how WMS technology is evolving and what software providers are doing to respond to changing consumer demands, he explained.
"We collect information [from vendors] about how their business has been going from both a quantitative perspective and some qualitative information that we use for our forecast," he said. "We ask, 'Where are you seeing changes in demand? What factors do you see influencing demand, and what product development plans do you have? What regions are strong in sales? Which are weaker?'"
Retail becoming key buyer of WMS technology
The most significant change in this year's WMS study from past years, according to Reiser, was the degree to which the conversation was centered around the retail side of WMS -- namely, e-commerce and multichannel sales paradigms. This is of great importance to manufacturers who not only sell their products through third-party vendors, but also sell their products directly through their own physical storefronts and e-commerce sites.
"An apparel company, for example, that may have had its own distribution centers and fulfilled to retail outlets is now also doing fulfillment to their own brick-and-mortar retail channels, as well as through their own websites," he said. "In the past, such a company may have had a different fulfillment center for all this, but now they're trying to consolidate this all into one warehouse. To do that, they need different [software] functionality to pick and pack products to individual consumers. They're retooling their warehouses in order to support that."
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This shift in retail models is causing a jump in WMS interest and purchases, Reiser explained. In order for a WMS suite to meet these changing demands, the software must be able to offer visibility into multiple retail channels and types, fulfillment centers, and inventory.
Another noteworthy trend highlighted by ARC's study is that some emerging markets are becoming more sophisticated in their uses of WMS technology, Reiser pointed out. "In their request for WMS proposals, [manufacturers from emerging markets] will ask for more advanced functionality, such as slotting. That bodes well for the sales of WMS extensions," he said.
Mobility is a next-generation technology that often gets paired up with WMS, due to the fact that WMS is "inherently mobile" through the use of warehouse technologies such as radio frequency identification and Global Positioning System, Reiser said. "We see some vendors offering business intelligence tools such as dashboards that show execution data and summaries that can be used by warehouse managers and can be displayed on tools such as iPads," he explained.
When it comes to cloud computing, WMS capabilities are still very limited, according to Reiser. A handful of WMS vendors are now selling cloud software, but these products offer only the most basic functionality.
Integration with other systems boosts WMS technology
Integration between WMS and other business technologies -- ERP and supply chain management, for example -- is also gaining traction, according to the study. "One of the more major trends is vendors coming out with supply chain execution platforms," Reiser said. "Manhattan Associates, for example, has attributed a lot of its growth over the years with its platform that integrates warehouse management with other functionalities, such as distributed order management and transportation management." Infor is also promoting its WMS-supply chain execution abilities, as is JDA Software, which recently purchased RedPrairie, he said. SAP previously provided integration to its transportation management system through its ERP system, but is planning to release direct integration capabilities from WMS to TMS in the near future, he added.
Reiser noted that having this ability to integrate WMS with other systems opens the door to a myriad of business benefits -- reduced total cost of ownership, simple system configurability, faster upgrades and implementations, to name a few.
Based on these study results, Reiser predicts that the performance gap between best-of-breed WMS vendors and big-box business software vendors will continue to narrow in coming years.
"In the past, you had best-of-breeds that competed on breadth and depth of features and functionality," he said. "Now, the best-of-breeds are creating their supply chain execution platforms that are providing some of the integration benefits that ERP used to provide and the bigger ERP vendors are extending their WMS features. From that perspective, both sides are acquiring the qualities that made their competitors competitive."
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