Buying the best warehouse management system (WMS) will take the organization to a whole new level of growth through enterprise-grade inventory visibility, modern automation, and strategic order fulfillment.
The “why” of implementing the best WMS is easy. HOW to buy a WMS is often where companies run into misconceptions, costly surprises, and often stalled growth. This article will help you decide which WMS is best for your business when It’s Grow Time™.
Looking for Part 2? Go there now: What is the best WMS and what benefits drive ROI the most?
Which warehouse management system is best?
Well, that depends on what you want to get out of it. Buying the right WMS for your business requires asking, “Do we want to simply harvest growth, or seed and nurture it?” Do you want to just react to problems, or plant for the future?
What is WMS software and isn’t it all pretty much the same? Nope. While all WMS solutions may seem similar, they are not. Their differences are hard to spot, yet heavily influential on your long-term growth.
Most WMS software does a good job at fixing immediate problems to harvest the growth that’s out there now. Other warehouse management systems are built from Day 1 to get you where you want to be in 10 years, with very minimal cost or disruption. That’s “planting” seeds for future growth. Spotting the difference often takes some costly lessons learned first.
Confusing options, misleading noise from salespeople, hidden costs, unexpected maintenance, and features that you didn’t realize you would need later are common factors leading to regrets.
Making the right decision requires digging deep into your unique requirements; the various types of WMS options; their capabilities, and benefits before making a decision.
Decisions to make before your WMS evaluation
Having the right WMS software is essential for growth. A dedicated WMS is designed to handle a variety of duties from automated pick-pack-ship and inventory tracking/syncing to supply chain analytics that drive critical decision-making on the floor.
Defining your WMS requirements
What warehouse problems do you need to fix? Some warehouse management systems are basic. Others provide more capabilities than you’ll ever need. Most are great at fixing immediate problems; very few consider the specific issues that you didn’t see coming. Flexibility is key.
Start by deciding what you want to get out of your WMS. Are you just looking to fix immediate problems, like these – or do you need something more advanced?
- Too many systems that don’t talk to each other
- Slow (or NO) reliable inventory data
- Manual or paper-based tasks that lead to errors
- Too many orders and long fulfillment times
- High operational costs including labor & shipping
- Poor insights into staff performance or customer KPIs
- Blind spots with extended partners like shipping carriers & EDI networks
- Time & cost to onboard users or add custom functionality
- No integrated barcoding for order management system (OMS)
What about the future?
- Which of these issues are putting the biggest dent in your bottom line right now?
- What is the financial impact of NOT fixing them?
- Do you also need capabilities to get ahead of future growing pains?
That opens another important discussion: what are the WMS options?
Classes of WMS software tools
There are a variety of software tools that have a WMS software component to consider:
- Standalone WMS tools
- Modern WMS + order management system (OMS)
- Monolithic supply chain platform
- Enterprise Resource Planning (ERP) with bolt-on or homegrown WMS functionality
- Supply chain management analytics
- WMS for 3PL warehouses
- Cloud-based or on-premise WMS
- Omnichannel fulfillment supply chain applications
WMS or OMS?
That depends on where you want to be in 10 years. You may not require the capabilities of a full OMS suite right now, but wouldn’t it feel good to know those capabilities are within arm’s reach when you need them — without having to switch platforms?
If future growing pains are a concern, look for a warehouse management system that offers an easy bridge to advanced Order Management (OMS) and Distributed Order Management (DOM) capabilities that will come up later (usually under very tight time constraints and pressures).
Not sure what is the difference between OMS and DOM (click to read). In a nutshell, you can’t have DOM without an OMS:
- An OMS is the system that manages and tracks the entire order process.
- DOM is an advanced portion of that system that allocates order fulfillment to the most optimal location.
Are you just managing logistics, or growing?
Will your company consider launching a direct-to-consumer (D2C) channel at some point?
Right now, a basic WMS might be okay: “200 more orders a month? No problem. Bring it!” All of a sudden, those 200 become 2,000, then 20,000. Shipping costs start biting into your margins. Now, considerations like DIM weights, labeling compliance, peak season surcharges, free returns, and other things come into play.
Before you know it, you’re spending most of your time managing logistics instead of marketing your new channel.
There’s a good chance you’ll eventually need to introduce OMS capabilities to manage it all profitably, such as drop shipping, automatic order routing and allocation, and pre-ordering. But what will that transition look like with your technology partner? Will it require 100 developers? Or a 12-month project with the vendor and their consultants?
If growth is in your future, opt for a WMS platform that’s made to add order management and DOM functionality at your own pace. With a predictable cost laid out up front.
Flexible WMS platform or monolithic suite?
Do you want to be a partner, or just a signed contract?
Familiar names in warehouse management systems, particularly those built under a monolithic brand of many other products, often fail to address the distinct goals of one business from the next. They “check many boxes” on the surface. Likely they have some impressive awards and recognitions, too.
But odds are, they’re riding the coattails of a tech giant. That name got their solution onto the analysts’ Top 10 lists, but it doesn’t mean their WMS is the best fit for your business.
The truth comes out in your RFP
Be prepared and dig in deep. Ask the right questions during your WMS RFP. Lean into available WMS software selection tools that unearth the true differences between modern warehouse management systems and legacy suites that are outdated, or cobbled together from an acquisition.
How does your decision affect business growth long term? Read customer success stories about what happens a couple years after go-live. You’ll find that mainstream supply chain suites were built with one focus: to sign lots of contracts. NOT to partner with, commit to, and grow alongside you.
Opt for flexibility and budget control
Modern WMS solutions give you the highest degree of flexibility and budget control. No surprise fees for adding users, SKUs, or channels. And built-in scaling capabilities – such as a single-codebase cloud architecture – which allows a fast path to new capabilities without a custom project.
For example, WMS applications that offer 100+ pre-built software integrations allow you to quickly connect systems to ecommerce marketplaces like Shopify, Amazon, etc., along with third-party shipping carriers, EDI networks, and more. They also connect to business applications such as your ERP or CRM, significantly reducing cost and time to get up and running on the functionality you need today. Not 12 months from now.
These gotchas usually don’t come up in sales talks, but they make all the difference in total cost of ownership, market agility, user adoption, and long-term results.
ERP or dedicated WMS?
It’s a response we hear all the time: “Do we really need a dedicated WMS or can our ERP handle the job?” Oftentimes, companies use their ERP’s inventory fulfillment module — which is really just an accounting system — instead of a dedicated WMS for one reason or another. Just as often, they come back to us regretting that decision.
Financial systems (ERPs) inform growth, but a WMS directs it. Learn more in this in-depth article:
ERP fulfillment modules simply cannot scale
They come with limitations, unanticipated costs, and long-term growth implications. The good news is, you don’t have to ditch your ERP to get the benefits of modern WMS software.
Modern warehouse management solutions like Deposco integrate into your existing ERP system, along with hundreds of other supply chain applications you already use (or will use). Via warehouse management software integrations, you get the best of both worlds.
Other needs to consider
Depth of supply chain management analytics
Deciding on the best WMS also depends on what degree of supply chain management software analytics you require. Some warehouse management systems offer more robust analytics and reporting than others.
Know what to ask before going into your RFP to clearly understand what you need. Are you just looking for basic KPIs related to what your teams are doing in the warehouse?
- Performance tracking: picking, receiving, packing, shipping, etc.
- Hourly number of direct moves, replenishments, cycle counts, etc.
- Number of transactions accomplished each hour by user, date, activity, location
Or do you need a deeper level of flexibility and extensibility in your supply chain management software analytics, like…
- Customized/personalized native KPIs and reporting options
- Ability to make changes to KPI graphical options and manage reporting without source code or a third party
- Frequent updates with third-party reporting tools
- Workstation or browser access to view, automate, schedule and manage reports (with or without printing)
- Bin-level barcoding and scan validation to understand quality control without taking people off their jobs to physically check every order
Consult this WMS software capabilities checklist to decide which supply chain analytics and WMS capabilities you need:
Are you a third-party logistics (3PL) firm?
If you are a 3PL that can deliver a consistent, scalable alternative fulfillment experience, the market is wide open.
WMS software for 3PLs delivers a strong competitive differentiator by solving clients’ labor issues, onboarding new clients quickly, slashing shipping and logistics costs for you AND them, and tapping into a value-rich fulfillment infrastructure.
Example of how WMS software for 3PLs benefits you
Nimbl (formerly ESM Fulfillment) is a great example of how WMS software benefits 3PLs. The firm was struggling with productivity around inventory fulfillment and billing processes for its clients in multiple sales channels. They used to have to pull information from multiple locations and combine it all into a spreadsheet, then put together financial statements based on that.
Deposco set up their analytics and reporting to show the metrics that are most important to Nimbl’s business, so they could improve team efficiency, sales, and shipment metrics all in one place. The analytics led Nimble to a:
- 64% increase in order volume in the first 3 months
- 4-day reduction in their 3PL billing cycle
- 25% improvement in cycle count and accuracy
Grab our 3PL Growth Guide to learn the top 7 areas where advanced 3PL fulfillment solutions can scale client value and grow your 3PL business faster:
“How to Grow Your 3PL: Fulfillment Solutions That Win Customers for Life”
Cloud-based vs. on-premise WMS
Cloud WMS software is excellent for fast scalability and a highly cost-effective, intuitive rollout. With no installation or synchronization required to make updates, companies of any size can manage growth with unlimited flexibility, savings, and control vs. on-premise options.
Benefits of a cloud WMS
Cloud-based WMS solutions help you compete and keep growing, not just operate. Jump to Part 2 to learn more about what benefits drive ROI the most.
Without the visibility of the cloud, you can’t react or adapt. Research by Bain & Company found that 53% of retailers and consumer goods companies are planning to increase their investments in these flexible cloud-based operations – with the worldwide cloud market expected to surpass $354 billion by the end of 2022.
The benefits of a cloud WMS elevate your competitive position:
- One source of the truth: Accurate on-hand inventory everywhere. Excellent for high volumes, expanding warehouse spaces, distributed channels, and unlimited SKUs.
- Superior inventory control: Automate, organize, and prioritize fulfillment operations to deliver the best customer experience, every time.
- Collaboration: Fast, secure, reliable information that’s not tethered to physical devices that are sitting in an office or on paper that can get lost.
- Modern functionality with a lower lifetime cost: The same level of functionality as in-house servers, but without the need for lethargic (and expensive) upgrades, middleware, hardware improvements, or a big IT staff
- Nimble integrations: Fast to set up and ramp up, ready to integrate with multiple systems including shipping carriers, EDIs, marketplaces, etc., with minimal downtime.
- Continuous improvement: Baked-in tools to establish optimal routines, measure performance, and identify new ways to provide better service at a lower cost.
- Labor savings: Fast onboarding and automation to free staff from managing logistics, such as packing and labeling requirements, handling customer complaint calls or billing issues, tracking orders, and more.
- Revenue growth without overspending: Real-time data generation to support the broad scaling of suppliers, product variety, new channels, and services.
On-premise WMS software ties up cash
On the flip side, an on-premise WMS brings a greater initial investment and higher capital to make operational and financial decisions because you have no good way to see everything going on with inventory inside your warehouse at all times. As a result, the business can’t move beyond reacting to problems and will tap out on growth.
In addition, software costs and entry thresholds are higher due to unanticipated licensing, maintenance, and server expenses. A cloud WMS lets you spread out costs over time, usually on a monthly subscription. A more predictable cost structure permits a significant transfer of funds from op-ex to cap-ex and positive cash flow.
Case in point, Tyndale
A good example is the work Deposco did with Tyndale, an ecommerce retailer of flame-resistant apparel. After considering 20 different WMS providers, they selected Deposco as the best solution to fit their current and future needs.
In just 3 months on Deposco’s cloud software, Tyndale saw a 41% increase in order lines picked per hour and a concurrent 99.25% jump in their picking accuracy rate. Read more:
Is omnichannel retail in your future?
One of the most interesting retail trends of the past year is that company size no longer matters like it used to when it comes to omnichannel retail. Advances in omnichannel retail fulfillment solutions are doing amazing things to the world of retail.
The tables are turning
We’re seeing more ecommerce players taking marketshare from Amazon at an increasing rate. In addition, marketplaces like Shopify are having days where their website traffic passed that of traditional leaders. In general, retailers have more freedom than ever to sell more products and variations in different ways, with less overhead and complexity.
The express lane is open with omnichannel fulfillment solutions
True WMS solutions have built-in omnichannel fulfillment solutions that are ready for retailers to grow. Anywhere, any way. This has been game-changing for businesses that need to scale, but have been limited by their back-end fulfillment operations, IT budgets, overwhelming volumes, and time.
Everything in one place
WMS software with easy integrations for ERP, built-in order management, and even store inventory and fulfillment gives retailers a clear picture of their omnichannel fulfillment operations in real time. So they can:
- Sell more products in different ways, cheaper
- Reduce errors, overselling, chargebacks, and surpluses
- Ramp up throughput and fulfillment speeds
- Mitigate costs and risk in peak season
- Adapt technology and pivot quickly with market fluctuations
Using Deposco’s Bright Warehouse solutions for retail, businesses have tripled hourly picking rates on Day 1 of implementation, along with being able to fulfill 7X more orders with consistent fulfillment times of under 24 hours. See more examples.
Some practical WMS comparison tools
Not choosing the right WMS software can hugely inflate your investment. Lots of research and deliberation should go into your decision.
You need WMS comparison tools, and this interactive WMS Software Selection Hub from Deposco has them!
Get the top warehouse management industry trends, tips, downloadable templates, and WMS comparison tools to understand the benefits of choosing the best warehouse management system for your business. The Hub features:
WMS Savings Calculator
How much can you save with a WMS? What’s your potential profit increase, using your company’s actual numbers?
Use this WMS Software Savings Calculator to:
- Measure against estimates
- Determine which projects are worth undertaking
- Adjust and interact with the calculations on your own
- Guide and benchmark progress during your project
Industry trends and fodder for stakeholders
Maybe you already know the benefits of WMS software, but others need a little convincing. Today’s warehouse management trends are why 54% of companies will implement a full-featured, modern WMS by 2024.
The stakes are high, and getting higher
Modern WMS software focuses not only on putting out near-term fires, but positioning you for future trends that have a material impact on long-term growth. So you can reduce risk, continuously improve fulfillment processes, and create long-term enterprise value across the board.
Competitors are investing
What are the warehouse management trends leading to the urgency to invest in WMS software? Is now the time to consider warehouse automation and robotics? What future-state investments should you be looking at now to reverse the impact of:
- Labor costs and productivity problems?
- Rising cost to fulfill and ship an order?
- Slow, siloed or inaccurate inventory data?
- Late, missed, or incorrect orders?
- Omnichannel customer expectations?
- Competitive pressure to innovate?
Easily understand the advantages of buying the right warehouse management software. Save time on presentations, strengthen your business case, and present relevant data that is simple for anyone to understand.
Free WMS RFP template
A key reason for failed WMS projects is simply not asking the right questions and not knowing up front what your growing business needs will be. This WMS RFP template will ensure that your solution fits the unique goals and desired outcomes of your project, both today and years from now.
Use this RFP worksheet in preparation for your first meeting. While not an exhaustive list, this template highlights the most important WMS capabilities to think about, with space for notes to compare and contrast between potential partners:
- Prepare for a productive proposal
- Compare WMS software with an in-depth source of the truth
- Download, print, and share it for discussions
- Get live help on what to ask
No two warehouses operate with the same custom needs or priorities. Understand your requirements and the many intangibles of selecting the best WMS software.
What capabilities are non-negotiable? What are the subtle differences of warehouse management systems on the market? Why do they matter?
Grab this WMS Capabilities Checklist in the Deposco WMS Software Selection Hub to easily prioritize your custom needs:
- Define and organize priority items in one place
- Improve accountability; use the checklist to secure budget
- Understand requirements you didn’t realize you needed
- Weed out capabilities that really won’t help you
- Eliminate WMS software options that can’t scale
- Easily communicate and share findings with your team