You’ve made the decision to implement a warehouse management system (WMS) – good choice. You will now be able to visualize a 99.9% increase in accuracy of inventory, reduced order processing time, improved worker productivity, potential elimination of yearly physical counts, in addition to receiving a detailed history of all activities. You probably like your decision even more now, right?
So, what’s next?
One of the most important aspects of achieving supply chain optimization is the actual selection of the right WMS for your organization. Executing a formal system selection process has an over 80% probability of completing projects on schedule. Here’s what you should take into consideration when choosing a WMS.
It’s important to establish a cross-functional team, representative of key business users and stakeholders but free of industry bias. The main stakeholder and leader of the selection should be the distribution team in conjunction with information technology, merchandising, buyers, customer service, finance, and human resources.
The internal cost justification assessment should be owned and developed by the core selection team. It is important to include the total cost of ownership (TCO) in the calculations and not simply the ROI. If you use a consulting firm, then use them for validation. Most consulting firms have developed good templates and models. Ultimately, companies themselves must take responsibility for the justification, and the selection team must sell their ROI to the executive management team.
Build into the project budget-friendly, sufficient funds to ensure success, and don’t scrimp on the time and resources needed to thoroughly design, test, and train. The money and time spent up front in these areas is critical to a successful and managed go-live. Invariably, something will come up that was not anticipated, so allocating about five to 10% of funds to the unexpected is typically reasonable.
Goals (Now and In the Future)
Be thorough in gathering your data as it relates to order volumes, near-term forecasts, peak season trends, SKU classifications, stocking units, shipping methods, item dimensions/weights/storage requirements, customer specific requirements, labor hours worked, etc. This will be your foundation to determine your goals and, ultimately, the decision to commit.
Talk with the team(s) who will be completing these tasks. Visit where each specific process will take place, watch and document the process, and ask questions throughout such as: How do you make the system work? Is this functionality an immediate need or future requirement? What is the work flow and demonstrated ability to handle your volume, order lines/hour, and number of SKUs per order?
Ensure that the end goals identified are clearly defined and understood by the organization, and be able to communicate how the project supports the broader organizational goals. Your project goals should be realistic and very simply spelled out.
Lastly, upon determining your goals, align your organization’s five-year plan for inventory mix, long-range forecasts, planned product mix, strategic goals, store opening projects, and e-commerce plans. This will help you define future flow design goals.
What could go wrong? What do you need your overall framework to look like? Do you need cohesive systems, or will you require disparate? Could there be any issues with technology currency or layered software?
Develop business scenarios that the eventual WMS must perform. By using the real data identified in determining your current needs and goals (SKUs, locations, order, receipts, and returns) in conjunction with your future requirements, you can provide actual, day-to-day business scenarios for each WMS candidate to prove they can execute. This step should be a team effort with the delegation of this responsibility to each functional manager and supervisor.
During performance scenarios, remember to involve your information technology team as much as possible. In the end, they will need to be the sign off that the proposed system’s technology platform matches either the company’s existing or planned platform. It ensures IT can support the application long-term.
Next, build out a list of functional requirements and be sure the list is thorough. Weight each requirement so that you can score the solutions you investigate. This also lets you know where your current processes may need to change before any test or go-live.
Tip: Throughout performance scenarios, do remember to follow a proven software selection and implementation process so that all necessary tasks required are included.
Demo, Demo, Demo
Have your vendors perform simulated go-lives, using actual workers to process actual orders using actual inventory. These tend to reveal gaps in knowledge and preparedness. These go-lives are specific with discrete requirements but not so restrictive that the solution providers cannot show you their functionality. It will give you and your team an understanding of how that software vendor is going to perform and help you narrow down your candidates during evaluation.
Tip: IT must be a part of your scenario process to make sure all technology matches existing or planned.
You can never under-test. This stage of the selection process will show you the solution and not just what has been talked about. You need specific requirements that align with your business and functions of the business. You should be able to walk away from a demo knowing exactly which software vendor is going to fit your needs.
Tip: Consider asking your vendors to perform stress tests on their systems, using similar, day-to-day tasks outlined above.
Final Evaluation Before Selection
Be picky. Once you’ve narrowed your list to bidders who will perform the simulated go-lives, implement your validation step to the finalists.
From there, ask your questions, do your research, and speak with references. Consider conducting site visits and even meeting with their technical teams. Lastly, consider negotiating. Do your due diligence to ensure your decision will be the best for the company in the next five to seven years.
In conclusion, the keys to overall success in choosing your WMS is letting your operation’s team own the project; get a commitment from all levels of the organization; build a trusting relationship with your team and chosen vendor; set clear and achievable expectations, utilize proven methodology, build a solution design, and test, test, test before making a final decision.
Shane Smith is a vice president of supply chain at enVista, a leading global consulting and software solutions firm. Smith has nearly 20 years of experience overseeing operations and designing/ administering systems in diverse distribution/manufacturing environments and a proven track record of cultivating exceptional management teams, turning out supervisors that bring operations to high levels of success and profitability.