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Podcast: The Impact of Cloud-Based WMS on Distribution Centers

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Cloud-based Warehouse Management Systems (WMS) are saving companies incredible amounts of money by helping them optimize systems through centralized, granular access to data. The initial costs of a WMS can be daunting, but they have been proven to streamline inventory management, labor management, space utilization and more. Steve Temple of Iptor Supply Chain Systems provides insights into today's Warehouse Management Systems along with when and how to invest.

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Podcast Transcript

Benjamin: Hello, and welcome to the UniCarriers Americas Podcast. My name is Benjamin Hunting, and today, I'm speaking with Steve Temple, Senior Solution Consultant for Iptor Supply Chain Systems, on the subject of warehouse management systems. Specifically, we're gonna be talking about how cloud-based WMS can impact distribution centers. Steve, I want to thank you for taking the time to be on the podcast today.

Steve: Oh, no. It's absolutely great. Glad to be here.

Discussing the Benefits Compared with Other Methods

Benjamin: My first question would be, "What exactly are the benefits of cloud-based WMS, compared to traditional methods or other alternatives?"

Steve: So one of the main benefits of moving to a cloud-based solution is it means the business can focus on their core business, rather than thinking about how to strategize the next 3, 5, 10 years of growth within their business because...Certainly when I was working within 3PL’s we had to take what we thought was our forecasted figures. It was actually supplied by our customers that had their own agendas to suggest how much they thought they were gonna put through our business. So we had to scale up to cover any number of different customers all over-inflating their forecasts to make sure that we gave them the quality of time that they wanted.

So you can imagine spending hundreds of thousands on this infrastructure, and then everybody falls short on their forecast. You only use 20% of it, but you've already spent that, and it's just sat there. It's wasted. Likewise, you spent a lot of money on licensing. You get maintenance on those licenses. So all in all, you just end up spending a lot of money. But what you do, when you move to a cloud-based solution, is you move to a subscription-based model. So that means you pay for what you use.

So key to that is you don't have to really do that much in the way of forecasting. That is your hosting solution partner that will actually provide the hardware back end for you. So it takes a whole load of hassle out of your business and allows you to just focus on supporting your customers.

Messuring ROI and Productivity

Benjamin: How are companies measuring success, like their return on investment and productivity improvements, after moving to a cloud-based WMS?

Steve: Well, the overall cost is always gonna be known. Now, that cost is gonna be nestled within provisions within their IT team, the hardware infrastructure, and then the support costs that go along with that. So that's quite a known quantity. It's fairly easy to manage productivity as well. You don't necessarily need labor management systems or anything like that. You can...When you’ve got a WMS operating within your business, you know how long tasks are taking to be executed. So you can see how much productivity you are expecting to get out of your individuals.

So at the end of the day, when you switch to a cloud-based solution, you end up with more of a gradually increasing cost because you never actually finish paying for it. That's one thing. So you know, on a graph, you might think, "Actually this looks really, really expensive because I'm just constantly paying for it. I never actually own it." But the reality is you never really own the IT infrastructure you've got anyway because you capitalized it over five years or whatever. You end up with big spikes in investment.

Getting Granular with Your Labor and Warehouse Data

Benjamin: Now you mentioned that the WMS-type systems, the cloud-based systems, give you the ability to forecast costs, control costs, and have a better understanding of what your investment is gonna be going in the future. By the same token, do you get a similar kind of granularity when it comes to things like training time and increasing the efficient use of warehouse space? Does a cloud-based system allow you to improve in those areas as well?

Steve: Absolutely, because one of the key things that you do as a software organization is you revisit your user base, and you look at the modifications that they've asked for, that improve the intuitive nature of the software. Because that's key to reducing your training time. At the end of the day, you want your guys to be able to come in and stretch operatives and start using the system and giving value back to the warehouse within hours, not days. So they need to have very simple-to-follow instructions to just get on with their day-to-day business. The thing is, if you make it simple for people to use, then they'll enjoy using it. If they enjoy using it, then everybody's happy. So that's good.

Understanding the Unique Efficiencies

Benjamin: And I assume that training time...It leads into other things as well. When we talk about reducing the amount of time it takes to learn how to use the system, does the system itself...Are there inherent efficiencies involved in a cloud-based system, that you wouldn't have in a different type of a traditional or an alternative-type warehouse space management system?

Steve: Again, it's gonna make it easier for you to leverage other customers' modifications, because the thing about the cloud-based solution is everybody's using the same version of software. So if the company is doing the software correctly, they will be taking all the modifications that make sense and incorporating back into their base offering. There's still gonna be a requirement out there for people to have their own bespoke solutions. But if you're talking about a true cloud-based solution, then people will be connecting to a single version of that software. So you need to make that as efficient as possible. So you might look at a customer. You think, "Hey. Wow. They got a really cool cross dock rule set up that's just so easy to use." Literally they're just scanning stuff off the back of a wagon. It's going straight to the outbound dock, as you would expect it to be used.

So you think, "Well, that's gonna make sense. That will work for the customers. So we'll incorporate that into the base offering and make it available in the cloud." So absolutely. It's about taking the best processes from all of your customers and making it available in the base application.

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Assessing if You're Ready to Invest

Benjamin: And when an organization is looking at all of what you've just described, it's very appealing. But how do they assess their own readiness to purchase and install this type of system, get it up and running? And how do they decide which system best meets their needs?

Steve: Well, for a customer...For somebody to decide that they need to deploy a WMS, then there needs to be a compelling reason. Now, the 3PL is working. They insisted on using just a simple, basic, internal access database to be able to track pallet movements within their warehouse. Then what they found is their customers were turning around and insisting that they wanted integrated solutions, and they wanted to be able to monitor activity more closely within the warehouse. So the 3PL that I was working for needed to react to that. So it's typically market reaction. You know? Is there a compelling event to mean that the company has to make that investment? Because it is a lot of time. It is a lot of money. People are not just going to do it without a good reason.

When they do want to actually assess their readiness and choose a proper supplier, then they've got to look internally. It's something that you're only gonna want to do once every 7 to 10 years. You're not gonna want to deploy WMS every 3 years. It's a long process. So the reality is they've got to be very, very close on what their requirements are. Then once they've got their requirements, it might just be 20 must-haves. But equally, that's an RFI as well as there’s 500 different requirements that a WMS has to provide.

So that's your starting point. You go through that. You send that out to the suppliers that you feel can provide a service. So how would you get that short list? Well, you can use search engines. You can talk to your competitors in your work space at trade fairs and whatever. Just find out whatever people are using. You know? What's the biggest-trending WMS on the market at the moment? Everybody knows about Manhattan, JDA, and Infor and all those guys. But is there a smaller niche product out there that might suit your requirements more?

What I'm seeing in the market is people are choosing smaller providers because they don't want the big-bucks implementation. What they want is a smaller provider that will actually work with them and actually take the time to take those functions and actually develop the software with them and actually form a proper partnership. That's the sort of thing you got to talk to.

Once you've settled on your short list, you then need to go and see reference sites. You need to go and see the software up and running, to make sure that the software house isn't just bragging you. Because at the end of the day, there are liars out there. You know? Sales guys, they're just gonna tell you whatever because they just want the commission. So you never trust a sales guy. Do you? You got to go and speak to the people. Find out what the experience was like, because every time you're implementing a fairly complex piece of software, there is always gonna be issues. It's a question of how your chosen partner reacts to those issues. You know? Were they there? Were they happy to stand up and take ownership for the solution? Make it happen? Or were they robust enough to actually turn around to the customer and say, "Sorry, guys. You didn't tell us you needed us to do that."

So it's a question of having that openness, that honesty, that you'd expect in a partnership. It's like a marriage, and only ever gonna work if everybody is honest, upfront, and both contributing to the partnership. Otherwise, you just end up with resentment. So it's very, very key because, at the end of the day, your WMS can make or break a warehouse. You know? If you've got a bad WMS, you end up having to throw people in there, which inflates your costs. You end up with a whole bunch of people that are disgruntled, saying, "Hey. It wasn't as bad as this before these guys came in." Yeah. Then you've lost the warehouse. You know? It's an awful place.

But yeah. The idea is just be open, honest. Choose the right partner, because it might well be that you want your frozen foods, and there is one particular vendor out there that's absolutely great at working within frozen warehouses. It might well be that they deploy voice solutions so that people can easily handle the frozen items through gloves and so on and so forth. So choose somebody that's actually in your market sector, that's using software, because chances are they're gonna have exactly the same issues.

One of the key things with the pharmaceuticals or automotive, some of those verticals, where there are core requirements that need to be embedded within the WMS as standard to make sure that they're not seen as modifications. So because it's generally compliance. You know? If there are regulatory regional compliance requirements, get a WMS that already handles that. Don't pay somebody to write it, because somebody out there will have already written it. So don't reinvent the wheel.

The Future of WMS: Revolutionizing Warehouse Infrastructure

Benjamin: Now, to kind of wrap it up, it's interesting that you mentioned, "Don't reinvent the wheel," but the innovation in the cloud-based WMS system...It's really something that I think is important for the industry, and I was curious as to whether you could think of...In your opinion, what upcoming cloud system features could potentially revolutionize how warehouse infrastructure is provisioned?

Steve: Well, this is exactly where cloud solutions come in, because it's not necessarily about the functionality. So one thing that cloud software does do is make functionality available for all users, immediately, but it is more about reinventing how people see software, because...I mean, if you rolled the clock back 20 years, the infrastructure was not available to be able to run any kind of transaction-based system offsite. It just wasn't there. So not without spending a lot of money. But now, it actually has become so much more affordable.

So what you're seeing is, internally within distribution organizations where they have multiple warehouses, they actually have their own data center set up internally. Then it's not a far jump to actually then move to a cloud-based system because, as far as those satellite warehouses are concerned, they're already connecting to what could be considered or viewed by the laymen as a cloud-based service. So yeah, I think it's absolutely crucial for software, going forward. I really do. I really don't think that...Being able to deploy software through sending out a URL through some kind of login script or some kind of rule within your network, to just roll out a WMS to all of your employees, is just...It's where it needs to be. To be honest, that's where the industry has been going, and now it's finally happening. So it's very, very good. It's very good.

Benjamin: Well, Steve, thank you for taking the time to talk with us today. We really appreciate it.

Steve: No worries. Thank you very much.

 

To learn more about WMS and other ways to optimize your warehouse, read our Warehouse Optimization E-Book. 

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