Recently I did some consulting about market, technology and future of warehouse management systems (WMS). Well here you get some of that consulting contents for free đ
WMS â what are we talking about?
Letâs start with getting a common understanding of WMS. It is that software and functionality layer sitting between the ERP and the actual warehouse, regardless whether the latter is automated or not.
Sometimes there is a misconception with ERP systems as these often also offer WMS functionality (e.g. the SAP WM/EWM module). Then there is also this WCS (warehouse control system) which somehow seems to overlap with WMS. In short, regardless how it is packaged, WMS means the data (base) and the functionality to manage the inventory of a warehouse. Hence it covers all the SKUs (stock keeping units) with the respective quantities, status, location(s) and reservations, orders etc. (Please excuse that this might not be an academic fully correct definition đ ).
WMS â The Players
So WMS is a core functionality for every warehouse. Which brings us back to ERP, the ERP solution providers and all the other players in the WMS field. Basically there are three different types of players:
- Over the last years the already mentioned ERP providers (e.g. SAP, Oracle) drastically enlarged and perfected their WMS offerings. We will discuss later why this often makes a lot of sense and when you should better look for another approach.
| - Then there are the âpure play WMS providersâ like Manhatten Associates. More and more of these are bought by the third category of players, the
| - Automation System Providers (like Intelligrated, Knapp or Daifuku) are enlarging their software offerings, mainly in the domain of WMS and WCS. Especially by acquiring pure play WMS providers (e.g. SSI Schäfer buying Salomon Automation in 2008 or DAI being integrated into Dematic in 2020).
Ok, now that I used the term already twice: what is a WCS? To be honest there are different definitions of WCS on the market. I personally like the following best: WCS also manages SKUs, quantities etc. but it does so only for a portion of the warehouse. Typically that âportionâ is defined by a sub-system, e.g. an automated storage and retrieval module. Hence WCS is typically closely linked to a specific piece of automated technology in a warehouse. A WCS might know how much of a specific SKU is available within the automated storage module but it has no data about other storage locations (e.g. over-stock) or goods-in quantities and processes.
Coming back to the WMS players, it seems that the pure play WMS providers are in a squeeze-out position between
- from the top: ERP system providers expanding and improving their WMS functionality
- from the bottom: automation system suppliers growing from machine and material flow control into the world of general warehouse management.
Therefore we see more and more âpure playâ WMS offerings now combined with logistic consulting as a means to escape that âsqueezeâ. Before I get started here with a lengthy discussion about logistic consulting, please read my blog article << How (not) to use a logistic consultant. >>
Which brings us to the question:
Who is the better choice for your WMS, the ERP or the automation system supplier?
The answer is obvious for a manual warehouse đ Actually many pure play WMS suppliers started their business with solutions for manual warehouses. Now with ERP systems providing practically the same functionality, for many use cases it makes sense to use the WMS module of your already existing ERP system.
For an automated warehouse the answer is not that obvious. In many of these cases the ERP WMS works just fine. Hint: just look at how many warehouse automation providers also offer integration and consulting services for solutions with ERP based WMS !
So, will the ERP systems and their WMS modules take over the entire WMS market? Well, the warehouse automation providers own a key component which they are able to leverage.
The leverage option of the warehouse automation providers
What underpins the WMS strategy of warehouse automation providers? In one word: technology. Many material handling technologies and system solutions require respective WMS support. Let me illustrate this with an example. In the early days of the SAP WMS module it only supported AS/RS systems with single deep storage. So it is the material handling solution and technology which determines whether the ERP based WMS is feasible.
Many advanced system provider specific solutions are not supported by the rather general purpose ERP based WMS offerings. Allow me to illustrate with some more up-to-date examples: Witron revolutionized and dominates warehouse automation in grocery with their OPM solution and system concepts. Dematic, Knapp and Vanderlande all have their unique solution for adding an additional dimension to shuttle AS/RS (âinter-aisle-transferâ, âEvoâ, âadaptoâ). Pouch systems from Ferag, Knapp or SSI-Schäfer provide a completely new answer to the question of buffering and sorting. Many of these solutions require respective WMS functionality to unleash their full potential.
If only the software of the automation solution provider is able to leverage the advantages of the respective solution or technology then this is your obvious WMS choice.
Technology is only a means…
As an engineer this is tough for me to say, but at the end technology is only a means. It is not a solution or an answer in itself. Why is this important? Because the future of WMS and the WMS market is only partially driven by technology.
…and an entrance option for new players
It is a no-brainer that modern software and communication technologies will become extremely important for the WMS systems of the future. Cloud Computing, SaaS, Edge Computing and AI based optimization algorithms will provide opportunities for new players to enter the field. And it also describes the innovation homework and learning targets for the established WMS players.
However the real value for the WMS user is not in the technology but in the application and the functionality. Typically we buy and use things because of their functionality, because of what they can do for us and not because of their technology.
Process and application
Which brings us to two key elements for the future of the WMS market: process know-how and applications. Earlier we already discussed how technology and automation solutions can determine the required WMS functionality. The same is true for processes and applications.
Many industries have unique processes with respective WMS functionality requirements. Letâs look at some examples:
- In pharmaceutical wholesale some processes are mandated by authorities, e.g. for narcotics or medicine with extreme temperature control requirements.
- The apparel business quite often uses a special âquarantineâ status for the goods-in process.
- Wholesalers for electric equipment are often also in manufacturing with cable cutting and fitting for their customers.
- …
Their is a tremendous opportunity for WMS providers to create customer value with understanding and optimizing industry specific processes. Hint: there is a reason why many âhome grownâ software modules used in warehouses are still waiting for a modern replacement.
To boldly WMS whereâŚ
(Yes, Iâm a Trekkie đ ) The second important factor for the future of WMS are applications. Applications beyond traditional WMS but with a lot of relevance for warehousing and intralogistics.
Currently WMS partially already cover WES (warehouse execution systems) or MFC (material flow control), e.g. by directly talking to the controls of a stacker crane. Especially with autonomous transport units – AMR, AGV and automated trucks – it would make a lot of sense to include fleet and transport control as a module within the WMS.
Technically outside of a warehouse but integrally linked to it is Yard Management. It is the logical application extension of WMS functionality such as goods-in and stock reservations. Some WMS already offer a yard management module. Expect more to come in this area (breadth and depth of functionality).
The next application extension is actually already available with some WMS: multi-site management. Whether it is center-and-hub warehousing or multiple same level warehouses, many operators are looking for means to manage and especially optimize their stock level and customer orders across warehouses.
The next level and currently heavily hyped is the so-called Control Tower. The idea is to optimize an entire supply chain across different levels, e.g. from point-of-sale over wholesale to manufacturing. Theoretically this makes a lot of sense. Personally I believe that the emphasis is and will be on âtheoreticallyâ. Just one question: if a global supply chain wide optimization requires a local sub-optimal decision at one point of the chain, who has the authority to make that call and how is this compensated? There are many more of these yet unanswered questions. Please refer to my Control Tower blog article for more insights.
…bespoke applications were used
With all this said, shouldnât WCS and MFC also become a WMS module? For two reasons I believe that it makes more sense to have these on dedicated platforms.
- Already explained earlier: WCS and MFC typically are very closely linked to the specifics of the automation technology. Hence they are âownedâ by the respective supplier and based on the respective technology platform.
| - From a system architecture and especially data (base) philosophy WMS and WCS/MFC live on different planets. Data consistency is key for WMS. Thatâs why a WMS is typically implemented around a database core with 100% synchronous and transaction based processes.
Reactivity, real time behavior is key for WCS/MFC. Therefore database access is an asynchronous process which doesnât interfere with real time machine communication requirements. These system architecture differences are so fundamental that bespoke platforms are preferred. (Iâve actually seen thousands and thousands of euros lost in a WMS/MFC development project where this was not understood)
Well, this is what I think about the future of WMS. Iâm looking forward to hear your thoughts and learn from you.