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The Role of a WMS in an Automated Distribution Center

We are at a point in time where advancements in software design, improvements in artificial intelligence and machine learning, available computing power, proliferation of internet connected devices and reliable high-speed internet have allowed for the realization of truly automated and intelligent technologies to support distribution center operations. Many of these technologies emerged and have been discussed since the late 1980s and early 1990s. And now are they being leveraged throughout the global supply chain

So where does that leave the Warehouse Management System (WMS)?  Traditionally, the WMS has been at the core of the distribution center universe. But how do current warehouse management systems play an appropriate role in modern distribution centers and how do they address key challenges?

Current Environment and Challenges

It is important to lay the groundwork in terms of the current environment and key challenges facing today’s warehouse and distribution center operations. Companies generally fall into one of two categories – (1) those considering replacing or upgrading an existing WMS; and (2) those evaluating how to best utilize an existing WMS.

Twenty years ago, I would have included a third group – companies looking to invest in a WMS for the first time. That third group is dwindling rapidly.

Companies looking to replace, upgrade or better utilize their WMSs understand the value of the software. There is no need to explain the WMS benefits or even calculate expected return on investment. But, these clients are also keenly aware of the potential for cost overruns and excessive resource requirements.

Companies looking to improve the utilization of their current WMS often head down this path as a result of a business change. New fulfillment challenges – for example, e-commerce that we will discuss later – are key drivers. They typically understand they have the capabilities to address new business challenges but are interested in the ‘how’.

Companies are facing significant headwinds as well. The challenges faced by companies vary by industry, but there are two challenges we continually see in this current environment: (1) e-commerce growth struggles and (2) staffing operations.

E-commerce is not a new phenomenon!  It has shown strong, consistent growth for over 20 years – pretty predictable growth. Then there was a global pandemic in 2020 (you may have heard) and everything changed.

Growth outpaced expectations concurrently with unprecedented labor shortages. This perfect storm of factors has crippled many supply chains.

Companies are struggling to fully staff their facilities day-by-day. A recent client of ours averaged ~20% daily absentee rate – sometimes as high as 40% – due to workers calling in and missing time primarily due to positive COVID tests. Needless to say, operations were behind and seemed to be in a never-ending catch-up loop.

With unemployment at all-time lows, companies are running into hiring issues due to the shallow labor pool.

These are the challenges – keeping up with labor-intense e-commerce fulfillment growth while navigating labor pool shortages – that are most significant to warehouse and distribution center operations today.

Using a WMS to Address Key Challenges

Is there a magic pill? Obviously not, but warehouse automation technologies come pretty close in terms of their potential.

Advanced goods-to-person conveyors, shuttles, AMRs, robotics and artificial intelligence / machine learning solutions on the market offer a great deal of promise. Why?

  1. The order structure and customer service requirements of e-commerce orders are fundamentally different than store replenishment orders that were dominant prior to the rise of e-commerce. These orders are smaller – 1-2 lines per order – with customers commonly expecting two-day delivery. Using automation to deliver inventory to packing stations to ship these items provides an obvious advantage.
  2. The old rule of thumb is that the majority of labor in a warehouse or distribution center is focused on order fulfilment. For that group, the majority of the time is spent traveling or moving through the facility to pick products. Leading automation solutions directly address this by reducing the amount of travel thus reducing staffing needs.

Companies have really shown an interest in warehouse automation. At this point I would describe the interest as very serious but, in most cases, still exploratory. For companies that have not previously invested in warehouse automation, they are using current challenges as an opportunity to consider potential use cases and validate return-on-investment calculations. When they do pull the trigger and invest, normally it is limited to a very specific portion of their operations rather than an initial broad rollout. They are being smart and selective when it comes to investing in automation. Essentially, they are dipping their toes into the automation waters at this point.

What Role Does a WMS Play?

Warehouse automation is all about the execution of tasks. A WMS is designed to manage operations rather than execute. Because of these differences, there is a natural synergy between warehouse automation and a properly deployed and integrated WMS.

Furthermore, the WMS continues to benefit the overall supply chain. Many of the traditional benefits such as visibility, labor planning and productivity improvement continue to drive its usage. Here are a few other reasons why a WMS is so critical to distribution center operations:

  1. These systems are fully mature and provide tremendous tactical and strategic benefits. Vendors in this space are rarely start-ups and the benefits are well established as the technology is proven.
  2. We are seeing parity in the marketplace in terms of functionality. So, the systems that are available from the so-called smaller players are in some cases as capable as the upper tier systems. Deciding on which system to select often boils down to non-functional criteria. For example, how well a system will integrate with other software in a company’s supply chain systems landscape. Or the level of support available from the vendor company. How deep is their bench?
  3. WMS continue to provide unparalleled ability to manage large scale operations. From viewing orders in a work queue and planning labor to configuring and supporting multiple pick processes in a facility.
  4. Because they are so closely tied to operations, the WMS is also a great repository of data that can be leveraged by other connected systems.

Let me leave you with two takeaways – while today’s challenges are new, there are also promising automation and systems solutions. And, the WMS continues to be a core solution because of the benefits it provides across the supply chain.
—Howard Turner, St. Onge Company

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