7 WMS Trends to Watch in 2010

In the course of researching the article on warehouse management systems in this issue ("WMS Update: Where is the warehouse management systems market headed in 2010?"), I caught up with Chris Clark, president and CEO of Alpharetta, Ga.-based Deposco (www.deposco.com). Clark has been in the supply chain solutions business for nearly 20 years, having previously helped co-found Procuri, the on-demand spend management solution provider that was bought out by Ariba in 2007. Deposco, his latest venture, offers on-demand solutions for warehouse and inventory management.

In discussing where the WMS market is headed this year, Clark offered a rundown of seven key trends he sees affecting this segment of the supply chain software market:

Higher levels of risk aversion in adopting WMS. "People are looking for lower upfront costs and a faster ROI," Clark says. "A six-month ROI is a pretty compelling story these days, but a 12-month ROI is not compelling — you'd never move that past the goal line."

Greater connectivity. "We're seeing more and more customers want to do real-time integration. They might be in the middle of a process in the WMS, and they want to go get information from another system, and make it part of that process." This is the continuation of the service-oriented architecture story, where systems can interoperate together much more tightly, such that one system can be the keeper of data and another system can use those data on a real-time basis without requiring a big batch transfer of data.

Move down-market for WMS. "The analyst reports are showing that the penetration rates for execution systems like a WMS are north of 80 percent for large enterprises, but they're less than 20 percent for companies of less than, say, $100 million in revenues. Right now we're seeing more and more of the smaller companies coming to the table, eager to adopt these types of solutions." In many cases, Clark suggests, a company like Deposco, with an on-demand solution that requires lower upfront investment to get started, can justify the ROI on a WMS for a smaller company just on labor reduction.

Deeper penetration within large enterprises. "The fact is that while the penetration of WMS solutions in large companies is above 80 percent, within individual companies, the penetration rate is not nearly that high. If a company has 40 distribution centers that they're shipping product from, they might only have a WMS in 10 of them." Many large enterprises, therefore, are continuing to look to solutions to drive further automation within their DCs.

Shift of decision-making away from IT. "More of the decisions around WMS solutions are coming from individual departments, such as logistics, supply chain or inventory management, as opposed to coming from IT. In turn, IT is looking more and more to use on-demand solutions to outsource, in a sense, the management of a solution to a service provider." IT, Clark asserts, is coming to view software-as-a-service and on-demand solutions as a way to meet their internal customer's requirements without having to engage with significant resources.

Leveraging the data. "Successful companies are learning how to use the information that their WMS can provide to drive improvements over time." As an example, Clark points to one Deposco customer that set up their management dashboards to track the productivity of individual users and then made HR decisions based on that productivity, moving staff around based on individual results, and identifying and addressing bottlenecks in their process.

Exposing data outside the four walls. "We have capability to let our customers share their data with their customers and their suppliers." And, he adds, companies are finding benefit in being able to provide their partners with real-time visibility into information like inventory levels, availability and shipment status.

Are you deploying a new WMS or replacing a current system with a new solution? How will the above trends affect your WMS investment strategies this year and beyond? Drop me a line at [email protected] and share your thoughts. I'll look forward to hearing from you.¦

— Andrew K. Reese
Editor, Supply & Demand Chain Executive