Warehouse management systems to rise again?

Will the recuperating logistics sector increase WMS popularity?
Andre Verdier, president of the executive committee, Supply Chain and Logistics Group
Andre Verdier, president of the executive committee, Supply Chain and Logistics Group

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According to industry experts, both last year and the first half of 2011 have witnessed high levels of growth in the global WMS market, following a 2009 tumble as a result of the global economic crisis. Behind the growth, lies not only a recovering logistics industry, but one determined to push the boundaries of warehouse operations in a quest to provide more streamlined and efficient services to their recession-battered clients.

“This positive trend in WMS sales and implementations has no doubt been influenced by the worldwide increase in goods movement in the same period, as well as the improved integration with other components of the supply chain,” says André Verdier, president of the executive committee, Supply Chain and Logistics Group, Middle East. “As the demand for integrated systems is still increasing, the outlook for the future is promising, with growth numbers ranging around 12 per cent to 14 per cent annually for the next three to five years.”

Whilst Verdier believes that the regional market for WMS is somewhat lagging behind that of more logistically matured countries, all the signs point to a steady catch-up. “Indicators of this are the developments in the two main markets of the region, the UAE and Saudi Arabia,” he says. The former of the two, the UAE, has a very low level of technology penetration, with an insignificant adoption of technology by the majority of the logistics companies in the industry. “This could be attributed to the limited availability of technology partners in the region, especially in the supply chain software arena, thus limiting the potential to adopt and adapt technology into existing logistics solutions,” Verdier explains.

The Saudi warehousing function, as part of the overall supply chain, accounts for the lowest share of the Kingdom’s logistics market at 17.6 per cent, although this segment is likely to hold significant growth potential in the next few years. “To address this challenge, logistics companies should focus on associating with an array of technology partners, or adopt readily available solutions,” he advises. “This adoption could prove to be a major stumbling block to the logistics solutions providers, who need to leverage this opportunity and upgrade the offerings to stay competitive in the market.” The good news is that all the global WMS players have been trying to gain a share of the Middle East and specifically, the GCC market.

In the last year, the region has seen an increase in sales and marketing efforts by the major ERP and logistics solutions vendors. “Coupled with the rise in demand from major markets such as Saudi Arabia, this will stimulate industry leaders to increase their market presence,” Verdier adds. The key to winning over the region’s logistics industry as to the real benefits of WMS, lies in understanding the changing requirements of warehouse operators in current times.

“The need for more ‘real time’ visibility and more focus on cash flow and the use of working capital, has meant increased demand for accurate inventory management and optimisation and faster goods movement in the supply chain. This has forced WMS providers to come up with better integrated and higher performing solutions to manage the store function,” says Verdier.

“Providing integrated warehouse strategies and business intelligence reporting tools are now must haves and no longer optional extras.” So what exactly are today’s warehouse operatives looking for from their WMS? Rather a lot according to Verdier. “The era of running around with extensive lists and pen and paper are long gone,” he emphasises. “Barcode scanning is the minimum, RFID is desired. They also want a system that is flexible and guides them through a process, even if exceptions come up or errors need to be corrected.”

Functions such as advance location assignment and pick workflow optimisation also feature highly on the list of desired tools to enhance the system experience. Once a company has been convinced of the benefits of WMS, the next step involves determining what system to implement and how it can be utilised to full effect. Verdier breaks down this process into three important steps. Firstly, the company needs to fully take into account its warehouse requirements and have well-structured policies, processes and procedures in place before selecting a system that can support these needs. “This choice of system should be driven by requirements and functionality, rather than the desire of a supplier to increase his sales into that system,” he says.

Secondly, all users of the system must be well informed and of the right calibre to work with the system. They must receive adequate training in process and system use. “Quite often the process part gets forgotten here. A user who knows how to fill out fields in a screen may not know why or what the impact is, and can be a potential danger to the integrity of the data and the execution of the function,” Verdier warns.

Last but not least, he recommends using a good business consultant to advise on policies, processes and procedures, as well as the integration with other aspects of the supply chain and the business. Ensuring suitable aftercare is also essential. “Whatever system a company invests in requires the full support of the supplier after implementation. Even the best systems will have flaws and will break down in certain circumstances,” Verdier points out. Additionally, requirements and use of a system will evolve over time, for example, volumes and transaction might increase and stress the load on the system.

“Without proper aftercare and support, a good system might become inoperable and hence useless,” he adds. Experts like Verdier understand that WMS is only one piece of the supply chain puzzle and needs to be efficiently integrated with other systems utilised by the warehouse. “Increased requirements in supply chain visibility and the need to Track & Trace inventory make the use of processes and systems mandatory,” he says. “A significant portion of that inventory is in stores and the most efficient way to manage these stores is by the integrated use of a WMS.”

Upstream functions in the supply chain, such as sales and operations planning, or material requirements planning, will rely on the WMS to accurately reflect the real inventory position in real time. With advancements in WMS technology, efficient integration is becoming even easier. Verdier points to the anticipated use of the Cloud Based WMS, which can bring systems into closer reach of the user community and enable integration with other parts of the supply chain.

With many other exciting WMS developments in the pipeline, one can appreciate why Verdier is predicting a significant increase in regional demand for WMS in the next three to five years. “The anticipated growth of the logistics market and the customer requirements of increased visibility associated with Track & Trace functionality, will drive companies towards a systematic approach to the WMS function and an automation of their operations for consistency,” he says.

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