Why are WMS Sales so Persistent? Here is How I Learned of WMS’ Ongoing Importance

Why are WMS Sales so Persistent? Here is How I Learned of WMS’ Ongoing Importance

Its All About the Details

I am currently finishing up this year’s version of ARC Advisory Group’s annual WMS market research study. It struck me as I reviewed past growth rates how persistent WMS sales growth has been. I then questioned if there is some other factor at play in the technology’s persistent growth. I decided to take a step back and propose an organizational explanation of why I believe WMS sales growth is so persistent.

My Learning Path

I started researching supply chain software markets about 15 years ago. I had recently graduated from business school with a textbook understanding of supply chains. As you may expect from a business school graduate, my knowledge was obtained from a “top down” perspective. More specifically, I learned how supply chains, as a part of operations, support a business. For me, getting down to the “nitty gritty” was modeling high-level objective functions with constraints using linear programming. For example, “maximize revenues within a theoretical facility that had two constraints.” This was a technical process, applied in a fairly simple fashion to an extremely high-level set of examples. It was nice to think that one could model a couple high level constraints on a computer and then “magically” determine how to maximize a company’s profits. It seemed impactful, influential, and technically sophisticated. It felt important.

Then Came Supply Chain Planning

Supply chain planning (SCP) was the first supply chain technology market I researched in detail. It was a sensible and interesting transition from my knowledge base. It utilized these linear programming concepts I found so impressive in business school. But it applied them in greater detail to aggregate supply and demand across numerous nodes. And these were enterprise applications, not spreadsheets. I thought to myself, “this stuff is great.” And I still think it is great. The technology is advanced, the capabilities are impressive, and the return on investment (ROI) is clear. It places the user in a centralized planning role, similar to my business school learnings. This approach is almost necessary to achieve the large economies of scale that deliver substantial revenue increases or cost decreases. But the process still takes a ton of inputs as “given.” Again, the process feels important, and the mathematics is impressive.

The Ballpark Looks Different Up Close

When I first began researching the WMS market, I immediately noticed that the focus was much more granular than planning applications. WMS managed warehouse activity down to discrete movements of workers, rather than something like monthly sales within a region. This seemed of limited scope to me at first. But as I learned more about the intricacies of WMS and the sources of its ROI, I also began to understand how much is taken as “given” in higher-level planning applications. In fact, I began to see the “givens” as “being taken for granted.” And this deeper level of understanding enabled me to see how generalized some planning applications can be – with broad scope but limited insight into details. What about the data quality? How about the variability in the data that is combined to create aggregates used as inputs? And the biggest assumption was that the plan with all of these conceptual improvements would be executed without a hitch.

When Assumptions Fail, or Details Change

I learned while researching the SCP market that the data was very often the weak link in the planning process. In fact, there is a great deal of uncertainty and variation embedded in many supply chain planning inputs. I had always taken these “givens” at face value. I also expected that executing on the plan would simply occur in a proper manner. These assumptions of data quality and flawless execution were critical oversights on my part.  Furthermore, these “givens” can be especially unreliable when you need to adapt to changing conditions.

Warehouse management systems are responsible for making many of these estimates a reality. And execution does not simply occur at the flick of a wand. Furthermore, getting execution right is especially important when it is an increasingly important element in the customer experience as it is today in direct-to-consumer fulfillment.  Finally, when assumptions fail outright, they are quickly examined under a microscope and receive C-level attention. Suddenly the people responsible for making those high-level, broad-reaching, scalable decisions are interested in obtaining a better understanding of why they failed to materialize. The recent supply chain disruptions (COVID shortages and more recent broad-based disruptions) have caused a number of planning assumptions to fail. And many executives want extra assurance that plans are properly executed. This greater dilligence places increased emphasis on the details of execution, and WMS is part of that scope. In my opinion, there is a bit of a cyclical process that keeps WMS relevant. It becomes more relevant at the top of organizations after it has been taken for granted for too long. I see that as a cyclical business learning process. And I expect that cyclical process to continue.

Leave a Reply