A new warehouse management system (WMS) can significantly reduce operational costs and improve customer service. However, WMS implementation is complex and intensive, and in practice doesn’t always succeed. Process improvements often remain limited, and deadlines are exceeded despite substantial efforts, as are budgets. This calls for thorough preparation. Therefore, we present a step-by-step guide for WMS selection:

1. Anchor objectives
2. Streamline processes
3. Keep it simple
4. Fit WMS into IT landscape
5. Create requirements document
6. Build business case
7. Compile shortlist
8. Evaluate WMS vendors
9. Select preferred vendor
10. Contract

Assemble the project team from people who know the current warehouse process and can think along about future improvements. Also ensure IT department input for technical aspects.

1. Objectives

What objectives do you want to achieve with the project? Is it better delivery reliability, shorter lead time, higher productivity, or more extensive information provision? Or is introducing new services high on your wish list — such as opening new sales channels (e-commerce) or delivering value-added logistics services. Or are there IT objectives like ensuring continuity of system maintenance or replacing outdated technology.

It’s wise to make objectives concrete. For example, a desired delivery reliability of 99.95% of order lines and lead time reduction from 48 hours to 24 hours with 99% on-time availability. The objectives anchor the logistics improvements in the project.

2. Streamline processes

With objectives in mind, you can start streamlining operations. Think beforehand about what optimizations you want to achieve with the new package. We highlight some common improvement options in WMS projects.

Paperless warehouse

Modern warehouses work paperless. Order pickers no longer have paper pick lists but receive and confirm tasks via mobile terminals with barcode scanners. The WMS immediately checks all executed tasks, significantly reducing errors. An added benefit is that all work is recorded in real-time, giving you good visibility into progress.

Smart warehousing

The WMS knows exactly where employees are and which tasks are still open. With this information, the WMS attempts to minimize travel and wait times. The system also knows which locations are available for intelligent location assignment for received pallets.

Shorter lead time

The market demands fast deliveries. This means sales orders can’t be accumulated in ERP all day but must be forwarded to the WMS immediately. If incoming orders must be shipped the same day, intelligent control is needed to seamlessly combine orders with varying urgency.

3. Keep it simple

When reviewing operations, strive not only for higher efficiency but certainly also for simplicity. Simplicity means less customization and better control.

4. IT landscape

A WMS doesn’t stand alone. Typically, it’s connected to an ERP where items, inventory, purchase and sales orders are recorded. ERP and WMS exchange information. Inventory the present systems and sketch the IT landscape. Indicate which functions are handled by surrounding systems and which by the WMS. Make a list of messages WMS must exchange with systems.

5. Requirements document

A suitable method is to describe future processes with control rules. This provides a complete picture of your requirements and wishes in clear context.

6. Costs and benefits

Before boards approve a new WMS, they want financial justification. Key cost items include services (internal/external hours), software licenses, hardware, and annual operational costs. Benefits are mainly found in higher productivity, shorter lead times, higher delivery reliability, better inventory accuracy, and more efficient space utilization.

7. Shortlist

Once the project team has board approval, you can search for a suitable package. Pay close attention to the price class of the package and the vendor’s experience in your industry, in warehouses of similar complexity and size, and with connecting the WMS to the same information systems.

8. Demo

Perhaps the most important part of selection: the package demonstration. In the demo, the project team challenges vendors to solve your main warehouse problems with the package. The project team prepares a challenging demo case featuring six to eight complex and essential warehouse issues. Reserve a full day per vendor for a demo.

9. Objective choice

For an objective choice, the project team must have all relevant information. Open points are elaborated and weak points from demos further investigated. Visit existing package users to hear their experiences.

10. Contracting

Before purchasing begins negotiations, it’s important to know exactly what’s included in the offers. This concerns both package modules and work to be performed. Only when everything is clear do negotiations begin.

About the author
Jeroen van den Berg is the author of Highly Competitive Warehouse Management and holds a PhD in warehouse algorithms from the University of Twente. He has been advising companies on warehouse optimization and WMS since 1997, running his own consultancy since 2001. He develops Metrica, a Warehouse Optimization System.