In our investigation, we delve into the pivotal function of WMS (Warehouse Management Systems) in modern e-commerce fulfillment hubs and its trajectory in shaping the future of these bustling facilities. As WMS evolves to be smarter, it is poised to further streamline operations and, in certain instances, integrate seamlessly with other warehouse applications, all within the confines of the facility.

What problems are facing the warehouse management system (WMS)?

In the realm of e-commerce, the efficiency of warehouse or distribution centers (DCs) is paramount for profitability. While a small-scale online vendor might manage from a stockroom or garage, larger e-commerce enterprises catering to diverse clientele require more sophisticated infrastructure.

The warehouse emerges as the hub where the bulk of operational efficacy unfolds, facilitated by a synergy of personnel, procedures, and technology systems. Notably, the warehouse management system (WMS) stands out among supply chain management (SCM) applications, particularly in the United States, where e-commerce sales surged from $52 billion in 2018 to a staggering $1.3 trillion presently, as per insights from e-commerce market research firm Insider Intelligence.

Challenges to current warehouse management systems in many parts of the world

Warehouse Management Systems (WMS) are vital software tools utilized by companies to optimize and streamline their warehouse operations. WMS automates various tasks such as tracking stock levels, processing orders, managing shipping manifests, and generating reports, among others. Moreover, these applications play a crucial role in identifying areas for improvement within the warehouse, integrating with diverse systems, and ensuring compliance with industry regulations.

However, a significant challenge arises with many existing WMSs currently in use. A considerable number of these systems are outdated, on-premises solutions originally designed for conventional brick-and-mortar operations. Consequently, they struggle to cope with the complexities and demands of modern e-commerce warehouses. These legacy systems lack the scalability required to handle the high volumes of orders, fluctuations in demand, and the unique "eaches" order fulfillment model prevalent in e-commerce, as opposed to traditional pallet and caseload handling.

"There remains a significant number of companies grappling with outdated WMS systems, some of which are rapidly becoming obsolete," revealed Norm Saenz, a partner and managing director at St. Onge Co. "Consequently, many firms are eyeing the latest market-available systems to replace these aging setups."

For instance, St. Onge is presently collaborating with numerous enterprises that have relied on their existing WMS for three to four decades (Fun fact: J.C. Penney pioneered the first WMS in 1975), now seeking enhanced functionality, advanced technologies, and seamless integration. "Having operated with legacy systems throughout their entire existence, these companies find their current setups inadequate," Saenz elaborated. "The surge in e-commerce serves as a primary catalyst for these transformations."

Various factors drive the adoption of new Warehouse Management Systems (WMS). These include the quest for enhanced inventory visibility, streamlined warehouse labor management, and overall operational efficiency. According to Saenz, the imperative to stay competitive in a tight labor market is prompting companies to seek out innovative WMS solutions. Interestingly, there's a trend where more businesses are exploring best-of-breed WMS platforms, aiming to transition away from their outdated legacy systems.

Saenz notes, "Best-of-breed WMS platforms are now more affordable and often cloud-based, offering a wider range of features." He emphasizes the increasing necessity for automation and integration in complex e-commerce fulfillment operations to maintain competitiveness. Predicting rapid growth in this sector of WMS, Saenz concludes, "I believe we'll continue to see significant expansion in this area."

Simply adding more individuals to the issue won't suffice

Contemplating the future of e-commerce fulfillment centers, Gartner's Dwight Klappich envisions an evolution for WMS software. He foresees heightened intelligence and increased integration with other warehouse applications, all within the confines of the facility's boundaries.

Klappich, Gartner’s VP of research, emphasizes the impending focus on smarter, more efficient work management. He highlights leveraging advanced analytics, AI, and other technologies to streamline work queues. Klappich underscores the significance of robotics and automation in addressing labor constraints, noting widespread corporate investments in these areas to bolster human workforces.

In the realm of e-commerce fulfillment, these considerations hold paramount importance. According to Klappich, prioritizing advanced analytics and AI for tasks such as labor forecasting is less crucial when dealing solely with pallets and cases. However, for e-commerce operations, integrating such intelligence into Warehouse Management Systems (WMS) is of great interest. 

Moreover, the rapid pace of e-commerce necessitates the adoption of "indoor locating" technologies. These technologies aid in tracking the whereabouts of personnel and pinpointing areas of activity, facilitating more efficient task allocation. Klappich notes a resurgence of interest in radio frequency identification (RFID), akin to an "RFID 2.0" movement, particularly spurred by advancements in physical store locations.

"Sourcing tagging, initially aimed at aiding retail outlets, now prompts warehouse operators to ponder its utility within their facilities," Klappich explains. "As RFID tags become ubiquitous on products, warehouses seek ways to leverage them effectively."

Klappich attributes these revelations and advancements to the surge in e-commerce and direct-to-consumer (D2C) sales. Gone are the days when major consumer packaged goods (CPG) corporations like Procter and Gamble and Gillette shipped goods in bulk to stores for individual sale.

Today, with the rise of D2C orders, products often require breakdown either at the manufacturing site or distribution center. Klappich notes, "Companies must now navigate the complexities of fulfilling high-volume, high-velocity orders, such as delivering a single pack of razor blades directly to customer A."

This shift necessitates a strategic overhaul, as Klappich underscores, "Companies can no longer rely on simply increasing manpower to address these challenges."

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Playing effectively with others

In the realm of technology integration, advancements in cloud computing, application programming interfaces (APIs), and interoperability have facilitated seamless communication among software systems. While legacy Warehouse Management Systems (WMSs) established decades ago may face challenges in this arena, newer iterations have been engineered with interoperability in mind.

Amarendra Phadke, Chief Technology Officer at Capgemini Engineering, anticipates this trajectory to have a positive impact on warehouse operations seeking streamlined management through unified platforms.

"The key is to establish independence between systems, allowing WMS to seamlessly integrate with warehouses of varying sizes and operations," explains Phadke, who envisions a future where WMS, Warehouse Control Systems (WCS), and Warehouse Execution Systems (WES) form an interconnected ecosystem.

However, Phadke acknowledges the considerable groundwork required before such integrations become ubiquitous. At the core of the challenge lies the need to effectively merge inputs from WMS—such as orders, labor data, and Enterprise Resource Planning (ERP) systems—with outputs comprising manual, semi-automated, or automated labor processes. Achieving this synergy demands substantial system engineering efforts.

"In tackling the end-to-end issue, Phadke elaborates, a multifaceted approach employing various algorithms is imperative. These algorithms serve as the bedrock for crafting software systems that interface with hardware, controls, automation, and manual labor operations."

Moreover, Phadke anticipates a surge in enterprises adopting Warehouse Management Systems (WMS) to streamline order and pick coordination amid their hybrid manual and automated work environments—a terrain relatively uncharted for WMS in the past. With the escalating adoption of Automated Guided Vehicles (AGVs), Autonomous Mobile Robots (AMRs), and akin automated material handling apparatus by e-commerce entities, the scope of tasks entrusted to WMS has significantly expanded.

"Historically confined to managing human-driven operations, such as forklift operations," Phadke underscores, "WMS must now contend with the complexities introduced by the integration of automated, semi-automated, and manual labor forces. The pivotal question arises: How can one effectively synchronize orders, picks, and assorted activities across this triad?"

A conceivable remedy entails WMS providers embedding requisite functionalities into their systems or forging integrations with extant Warehouse Execution Systems (WES) and Warehouse Control Systems (WCS) applications. "Although still somewhat speculative," Phadke notes, "this transition is poised to materialize over the forthcoming one to three years."

Tips for managing WMS operations in 2024

Howard Turner, in examining the present state of e-commerce fulfillment and the advancements occurring in WMS technology, foresees a future where WMS and allied systems seamlessly integrate to serve as the "decision-making hub" for bustling warehouse operations.

It's unlikely to occur until approximately five years from now, but by then, operational management tools could potentially coordinate various warehouse "zones" staffed by both human workers and automated labor.

In a strategic move, companies are poised to leverage operations management tools for precise labor management, down to the hour, aligning with anticipated order volumes. This enables them to effectively allocate both human and automated labor resources as needed.

"Turner highlights a pervasive challenge faced by companies: the daunting task of consolidating data spread across various zones within warehouses. Effectively managing and utilizing this vast pool of data remains a pressing concern, underscoring its potential as a futuristic frontier ripe with promise." 

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