By Alex Mills, Sales & Marketing Director, Chess Logistics Technology.
Progressive businesses place web-enabled and cloud-based services at the heart of their operations.
Marketing and promotion is online and social, sales are web based, payments are electronic, and fulfilment (albeit usually managed by third parties) is trackable in real time using web and app. The missing link? Stock control – including warehouse management and order picking.
Stock control and warehouse management has come a long way in the past thirty years, but maybe not as far as other business processes. This is odd because warehouse management was one of the first business functions – outside office applications – to be computerised. Applications originating in the 1980s have evolved into warehouse management systems or been merged into ERP solutions. They have delivered increasing levels of functionality and interoperability, enabling streamlined and automated processes to eliminate errors and improve productivity.
The early systems were developed for large companies such as major manufacturers, FMCG producers; distribution companies and retailers who could see the benefits of systems offering synergies, efficiencies and savings. Vendors invested heavily in these solutions, which were based on solid, proven core applications. This meant the price was always prohibitive even before taking into account the configuration, bespoke and support requirements of each new customer. For a variety of reasons – security, privacy, ownership - these systems still tend to be hosted by users (or their IT service providers) on their own infrastructure or by vendors as part of a managed service.
In the meantime, smaller businesses have been left behind. The cost of implementing even a modest conventional system has kept WMS beyond the scope of most until they reach some indeterminate threshold. This is the business reality but as with so many other things the web has changed perceptions. The smallest companies now offer products for sale through their own (or third party) websites to compete with their larger rivals. To the customer these e-commerce sites can look the same as those operated by larger suppliers. Catalogues are comprehensive, product descriptions detailed, payments seamless and orders tracked all the way from warehouse to final destination.
For many of these businesses the stock control and WMS part of their operations may not be as sophisticated. Key functions such as receiving products and allocating them to suitable storage locations is managed by simple spreadsheet or "pencil and paper", as are equally important processes such as order picking and assembly, despatch and general stock management. This may be OK while things are working but growing businesses need to remain agile. Rightly or wrongly customers expect the same high levels of service from anyone they buy from.
The problem is that there is next to nothing available to meet these requirements. For many, the big ticket systems remain out of reach. The major WMS and ERP vendors continue to focus on big customers. Solutions, if they exist at all, are often cut-down versions of the vendor's mainstream solution which are too complex or expensive.
A new approach is needed. Something like a cloud based WMS that covers the core functions offered by the larger systems and perhaps even supporting a small amount of configurability. The most important aspect of these systems would be their ability to support core stock control and WMS processes with little or no set-up overhead. They would be technically scalable to support a growing business and would interface with existing common ecommerce and business applications such as order processing and invoicing. Pricing would also be scalable with little or no setup cost. Instead a regular subscription would be based on the number of concurrent users, transaction volumes or something else that grew with the business.
This is important because providing customers with accurate stock availability information is key for any retail or supply-based business. Customers who visit and cannot verify the availability of items they want, or when they will be delivered, will quickly look elsewhere. But as businesses grow they recognise other reasons for effective warehouse management. Processes that meet the needs of a small business can easily become cumbersome, complex and unsustainable as the operation grows.
Moreover, growing businesses always need cost control. Optimising stock levels and ensuring processes are simple and effective is critical. Businesses need to know exactly what is in stock and where it is at all times – just like the big boys – to provide a comparable level of service without letting costs run out of control. Of course, all the traditional benefits of WMS would still apply including data accuracy, reduced rekeying and ability to exchange information seamlessly. Surely the market is ready for an alternative model that meets the needs of small to medium sized businesses.