Warehouse management systems (WMS) and related software have gone through a number of design evolutions. If one goes back to ancient times, which is only a couple of decades ago, most warehouse management systems were in their infancy. Most were designed to operate mainly with paper-based systems, although a couple of providers had foretold the future with customized systems involving RF and barcode technology.
The core of many WMS systems was functional capability like:
receipt processing, recording and exceptions (over, short and damaged);
putaway and pick slot replenishment;
less-than-full case order picking and packing;
shipping and manifesting;
inventory control (including in-warehouse location management, and lot control in some specialized cases);
support functions like inventory counting, archiving and records, pallet control, etc.
Technology leaders that specialized in real-time applications also offered other solutions, like labour management programs.
Much of the software required lots of customization, which meant modifications to meet customer-specific needs were both time-consuming and expensive. Software was usually written in a hard-coded style with limited flexibility, so accommodating multiple customer needs was very difficult—if not impossible—unless the underlying code was very well designed.
This created another problem for vendors: with the continuing rapid evolution of computer hardware, updates to the software were continuously needed.
Many of these issues came to a head due to the Y2K software bug scare. New WMS software expenditure drastically dropped as companies gave priority to the immediate operating concerns and the upgrades needed to ensure Y2k survival. The result was a wave of industry consolidation amongst vendors which has continued to this day.
Compared to private industry warehouses, 3PLs face multiple customer requirements, including:
Different practices and processes by 3PL clients within the same facility.
Additional labour information to support accurate cost allocation and billing by the customer, and to avoid under- or over-billing.
Information for such things as labour efficiency and tracking to support the marketing and sales staff in rate negotiations. This is a need not commonly found in normal private distribution centres, which often worry more about functional totals.
Good stock location information, including capacity and occupancy by type of storage media.
Varying billing practices for different clients.
Demands for real time information by customers.
Integration of WMS and TMS systems to operate multi-customer freight consolidation programs.
Protecting customer confidentiality while dealing with a wide variety of supplier and retailer communication formats and styles.
Efficiency needs and evolving data capture needs.
The average 3PL WMS vendor didn’t have the architecture to support many of these needs, leading to the growth of niche vendors who answered the demand.
After the Y2K consolidation mass customization rather than hard-coded software became the trend. This was often accompanied by business process engineering of customers’ processes and practices. In effect, this meant the software companies no longer tried to accommodate every customer’s need but offered a standardized profile. Mass customization also allowed for enhancements to be implemented independently of the underlying source code, greatly simplifying the updating and upgrading process.
With the industry consolidation there was also an effort to expand functionality into new areas. Today, those areas include:
Order fulfillment, inventory sourcing and allocation from multiple sites.
Engineered labour standards, particularly if combined with voice recognition.
Slotting, location and capacity management.
TMS and yard management.
Trade partner integration.
For 3PLs, in their middleman role, communication integration with multiple parties has been an IT need for decades. This need has increased as large customers have levied heavy penalties for late deliveries, and as mobile devices have become common. Service-oriented architecture, in which independent devices, protocols, and platforms communicate with each other, has developed to meet the need.
For the smaller 3PL operator, software-as-a-service applications (SaaS)—which outsource the IT function—will prove attractive. While many companies have been reluctant to place data in the cloud, it is likely the ultimate step forward.
Dave Luton is a consultant in the greater Toronto area.