Current State of Cloud-Based Warehouse Management Systems
Cloud-based Warehouse Management Systems (WMS)
have been around for 4 to 5 years. Up to now, customers of these systems have been primarily smaller companies or startup companies that do not have the infrastructure or financial strength to implement a full-fledged, on premise, WMS
. These companies usually do not have their own IT team, and to implement a complex software project like a WMS, requires significant investment in time and money as well as substantial changes in the company’s workforce. With a cloud solution, it is much easier for smaller companies to gain the benefits of inventory control and tracking within a WMS without major operational changes.
Similarly, Third Party Logistics (3PL) companies are heavy users of cloud-based warehouse management systems for several reasons. The top benefit for companies using a cloud-based WMS is a flexible ongoing payment structure, which is a huge benefit for 3PLsthat can now pay a monthly/annual subscription rate. Also, as 3PL companies gain or lose customers, their WMS cost of ownership quickly changes up or down, so a monthly or annual payment schedule helps them minimize the impact of customer changes. Additionally, a cloud-based WMS usually has an easy way of connecting to external systems or has a user-friendly interface that allows new 3PL customers to quickly establish a connection with the 3PL. Easier and quicker setup means 3PLs can start making profit very quickly.
Cloud-Based WMS Solutions for Larger Enterprises
Medium and large companies have not had much luck implementing cloud-based warehouse management systems that would work well for their distribution business. These types of companies have very different needs for their warehousing operations versus smaller companies. Automation, conveyor systems, speed of operation, and direct connection to their ERP system are just some of the reasons for them to stay with an on premise warehouse management system. Usually, larger companies have well established IT teams who are experienced and readily available to implement and maintain complex software systems, so installing and maintaining an on-premise WMS is not a challenge.
Security is also a primary concern for larger companies. This greatly impacts the decision and strategy to use an on-premise WMS. Finally, many, if not most of them, already own an on-premise WMS and possibly have for a number of years. They have likely invested a significant amount of time and money into this system, so making the switch to a cloud WMS does not typically make sense or provide all the necessary capabilities. However, as the capabilities of cloud-based warehouse management systems grow and mature, not only could they become more viable for larger corporations, but WMS software vendors who also have extensive knowledge of building Warehouse Control Systems (WCS)
and Warehouse Execution Systems (WES)
will become more interested in implementing cloud-based systems for larger corporations.
Benefits of Cloud WMS Solutions
As more options become available on the market, companies that have WCS/WES functionality will offer full-fledged warehouse management systems. Benefits of these enhanced cloud-based WMS systems are:
- Low Initial Setup Cost - Using the cloud, businesses will only pay a flexible subscription rate, eliminating the capital expenses of implementing hardware, software licensing, and IT specialists in-house as well as servers or data center infrastructure.
- Total Cost of Ownership (TCO) – This solution has a lower overall TCO compared with on-premise solutions. Upgrade fees are minimal or could be non-existent in the correct setup.
- Smaller IT Footprint – Companies that implement cloud-based solutions generally have less need for a large on-site IT staff.
- Ease of Implementation – Cloud-based warehouse management systems can be rapidly deployed without major interruption to daily company business.
- Accessibility – With the cloud, access to key system data is available from any device whether it is a desktop, laptop, mobile phone, or tablet. It also empowers employees to make smart planning decisions using rich graphical analytics.
- Scalability – Businesses can quickly ramp up server capacity for surge seasons and throttle down to save time and labor when business is not operating at peak performance. Modules and functionality can be added to a current system with ease.
Today, cloud-based warehouse management systems have a strong footprint when it comes to implementations for smaller customers and non-automated 3PL companies, but when it comes to large systems that are highly automated, cloud solutions are still in their infancy. With an increase in the presence of WMS providers that have the capability to add automation to their offering, cloud-based WMS will become a more attractive and viable solution for larger companies. The future looks good for cloud-based warehouse management systems, and it seems sunshine is about to appear.
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