Best-of-Breed vs. Integrated Systems: The case of WMS

When choosing software for a particular aspect of your business, be it CRM, Shop Floor Management, Quality Control, Point of Sale, WMS or anything else, the choice between selecting a specific package to address your needs (Best of Breed), or selecting an overall system that will serve your business as a whole is not one that should be taken lightly.

If you do not already have an ERP system in place, you might want to consider looking for a system that covers both the specific functionality you are looking for, as well as being a fully functional company wide solution. For companies that already have an ERP system, try to find out if your vendor offers a WMS option, and even if it doesn’t include all the very specific functionality, if it’s “close enough” you should certainly weigh it carefully against the integration of third-party options. Let’s look at the case of Warehouse Management Systems, or WMS.

Implementation of WMS systems has always been a major challenge even when undertaken with budgets of $500K and upward, so it is understandably a greater challenge within the budgets that small and medium-sized companies can afford. A major contributing factor to this challenge is the integration complexity of a system that is not part of the ERP system. Implementing a stand-alone WMS solution, in addition to the complexity of its integration, could have a tremendous impact on pricing and costs, overall system stability and the efficiency of day-to-day work.

Issues
Following are some of the common problems faced when integrating an ERP and WMS system:

1. Inventory balance discrepancy (or “mismatch”): there are a plethora of issues that could trigger an inventory balance discrepancy between a system with separate ERP and WMS software. For every part for which a mismatch is detected, there may be hundreds (or thousands) of transactions that should be investigated to analyze the cause of the discrepancy. Selecting the two-system approach mandates the appointment of individual/s who would do the investigation and make it part of their job description.
2. Incremental system initiation is almost mandatory to avoid costly downtime in a warehouse. There are two ways to achieve incremental implementation, both of which are difficult if not impossible to accomplish when the WMS is a separate entity:
   1. Isolate an area in the warehouse and implement the WMS on that area only.
   2. Isolate an activity (e.g., “pick”) and implement throughout the warehouse.
3. Incremental system shut-down: warehouse management systems (integrated or separate) can suffer from erroneous data definitions that will result in system malfunctions. When working with a third party WMS, there is no way to incrementally isolate the area or operation in which the malfunction was detected. Unless a quick fix is provided, the whole warehouse operation may come to a standstill as the problem spreads and is exacerbated with every additional transaction or activity reported into the system. Incremental shut-down capabilities are a readily available option in a fully integrated WMS/ERP system.
4. Managing assemblies (packing small packages into larger ones, unpacking, etc.): due to complexity, managing assemblies can be a significant issue to resolve when working with two separate systems. But in a fully integrated system, it’s an integral part of the ERP system, extended into the WMS.
5. Data synchronization challenges:
   1. There are a number of inventory attributes that are customer-specific in both what they represent and the business process/rules that they must fulfill, such as customer-designated inventory allocation (quantitative, prepaid, etc.), “ship to/bill to” locations and more. Any mismatch between the ERP system and the WMS when such attributes and rules are synchronized could cause a discrepancy between the two systems, which in turn may result in prolonged work stoppages until the problems are identified and resolved.
   2. Delivery priorities as set by the Supply Chain Management (SCM) system in the ERP system are difficult to synchronize with an external WMS on an ongoing basis. Tracking and synchronization between two systems to account for other actions in the warehouse, such as “Put”, that are temporarily implemented in the ERP system can be troublesome.

An integrated solution

Some ERP systems now include an integrated WMS module. Following are some of the benefits provided by the integrated WMS-ERP solution:

1. Integration: an integrated WMS system enables the warehousing functions to interact seamlessly with other system and corporate activities, be they manufacturing or distribution related. Whether your business is manufacturing bars of soap or providing maintenance for jet engines, the warehouse functions as an integral part of the business, so it makes sense to manage it as an integral part of the core software solution.
2. Visibility: an integrated WMS system provides a greater depth and breadth to supply chain visibility, helping users not only to check order statuses, but also to meet ever increasing delivery standards, manage global operations on many levels more efficiently, and provide customer service reps with crucial information and alerts.
3. Unification: unified data structures (part catalogue, warehouse/location records, etc.). As a result, any authorized user can perform data validation during initial system implementation using a single system and interface.
4. Interface consistency: With a unified user interface, training fees and learning curve times are greatly reduced. Getting new employees up and running on two different user interfaces is always more costly and time consuming than learning a single user interface.
5. Unified system maintenance: Of the many issues that could be covered under this topic, a predominant one is maintaining “user permissions/profiles” in two different systems.
6. Overall benefits of the ERP system are automatically included in the WMS functionality: BI features including Dashboards and KPIs, BPM functionality and more.

If the WMS is part of the ERP system, warehouse operations can interact seamlessly with accounting, CRM, Supply Chain, production processes and more. Purchase, sales and inventory processes can be used to trigger the putaway, picking and replenishment tasks, or vice versa.

Is ERP becoming Sexy?

Business software, accounting, workflow, process management and MRP… for many people these terms are almost sleep inducing. In the heyday of hi-tech when everyone dreamed of fortune and glory, top developers and creative thinkers were rarely lured away from lucrative and exciting positions by companies in the business management and/or ERP field. But with the economy still teetering towards recovery and companies streamlining their business processes, closely watching where every penny is spent and reining in costs, more and more eyes are looking at companies and products in the business software and ERP space.  And with new developments in technology that challenge developers to create better products, incorporate new features and give customers more options, little by little ERP is becoming sexy. For consumers, corporations and developers. And for the most part, sexy sells.

What makes software or technology sexy? Historically that would be design and technology: think ipods. For business software the focus had always been on different traits: functionality, reliability, stability and availability. But more and more ERP developers are tapping new technologies and incorporating them more rapidly than ever before. Perhaps this is driven by better development tools, or simply by the technological innovations that continually sweep into our lives, and vendors are “riding the wave” of customers’ demands. With more people using VOIP and social networking for business, for example, it was only a matter of time before they would want functionality to support these tools in their ERP system.  WPF, Cloud Computing and SaaS are only some of the sexier adjuncts recently coming up in the ERP dialogue. With new design and graphic options ERP software is becoming more attractive and easier to use, and many ERP/CRM programs can now be accessed via a browser window from anywhere in the world. And of course the range of functionality is growing.

ERP is made sexier with more options. And as one company put it – ERP options are now limited only by as far as you can think. Product innovation not only attracts customers, but it attracts talented and creative engineers and designers, which in turn leads to creative thinking and design.  In some programs users now have more control over certain features, even some basic level of design and customization. As long as you can trust that the traditional aspects of the system are sound (functionality, reliability, stability and availability), you can look for a product that excites the users and promotes adaptation within an organization. Employees who can control their user experience will have a sense of ownership of the product, and they will be more inclined to make the best use of it.

Companies should look for vendors that are excited about their products, not only for what is in place on the day you evaluate it, but in terms of what innovations and developments they have in the pipeline. Vendors that are familiar with and take advantage of new media and technology options are ready to incorporate them into their systems once reliability and stability are established. Look for vendors that issue regular version releases, keep up with new developments in back- and front-end technologies, and encourage their customers to keep up as well. ERP vendors should listen to their customers and help them manage the processes they have in place, but they should also be able to challenge them to do things better. ERP should be about empowering companies and individual users, and not forcing them to make do with inferior technology and products that look and feel outdated. In today’s ERP market, functionally, reliability and stability can be found in products that are at the same time making inroads with the technologies that do excite us. Solving business problems and streamlining is the driving force behind most ERP sales, but there is no reason that the UI can’t be exciting and inviting, platforms flexible and the user experience empowering. And that’s sexy.

Choosing the Right Software Vendor (part 2)

Our last post discussed the top three criteria for choosing a software vendor:

• Vendor Stability
• References
• Software Upgrades and Version Release

This installment will address crucial aspects of the actual anticipated working relationship you will potentially have with each vendor and covers:

• Maintenance and Support
• Implementation
• Training
• Working Demo

Maintenance and support                                                         

With any complex software that is upgraded on a regular basis you can expect occasional problems or issues to crop up. The important thing to look for is a system in place to address these eventualities. This is something that can vary widely by reseller and by manufacturer, and one size does not fit all.

• What are the support terms?
• Are different levels of support available?
• What are the escalation procedures?
• Is there a guaranteed response time (even if only to say that they are still working on the issue)?
• Are upgrades/service packs released on a regular basis?
• Is there a toll-free line, Web support or e-mail support?
• Can you track progress of your support ticket or call on the Internet?
• Who from your team is allowed to contact technical support?

Terms and cost of support will vary. Many will charge an annual maintenance fee which is often calculated from a percentage of your software’s price, to provide basic level support and upgrades. Most will charge an additional fee per ticket item or service related issue, or you may have to pre-pay for a set number of service tickets or hours spent providing support. Just as all support plans are different, so too support services may come in all flavors and colors. Make sure you understand what kind of support is available so that there are no unpleasant surprises down the line. Also, while some resellers and/or vendors may only support their own product, others may have support teams who are able to assist in areas that may be underlying to their solution such as database management. If not, make sure that you find someone that can support those systems so that in the event of an emergency you don’t have to start doing your homework while in crisis mode.

Implementation

It’s crucial that any potential vendor takes the time to understand your needs and how you work as a company. Be wary of vendors that agree to show you their solution without first asking you some in-depth questions about what you are looking for in a solution and what key issues you are hoping the system will address. That being said, if a vendor has experience with other companies in your space, you may learn from their experience and discover new and better ways to do things so move forward with an open mind.

Ask about the vendor’s implementation methodology. Are they able to customize the software or processes as required? Are the costs of training rolled into implementation? For example while doing some initial data conversion to the new system, perhaps in the process the consultant will show key member of your team how to it for different areas or in the future. Find out in advance what is included in the implementation and rough estimates on how long each item will take. Does the vendor help you set up business rules? Are SOP (Standard Operating Procedures) included? The idea is to uncover as much information as possible and to commit the vendor or reseller (and yourselves) to a plan in writing. This will help all concerned stay on track, on schedule and within budget.

Following are example of some of the items that may be included in an implementation checklist:

• Business/system analysis
• Project management services
• Installation
• Customizations
• Setting up reports and business rules
• Data conversion/migration into the new system
• Training

Training

The vendor should have a clear plan for training your team on the system. Although many businesses prefer having the training done on-site, that is not always possible or cost effective. Optimally, the vendor will have different options which you can choose from including user documentation either built into the system, file based or a combination of both. Do not expect printed manuals as many vendors now leave the decision to print to the customer and provide PDF files or even word files that companies can edit to suit their particular needs. Ask to see samples of the documentation. Verify if some basic training is included in the implementation plan. Set out clear goals for training that is arranged either on-site or remotely. Web-based training can also be effective, if done properly. Find out what topics are covered in each session, where and how the training is done, who is trained, how long it takes. Another thing to look for is a demo company or database set up within the software itself. A demo company is one that includes dummy data that users can manipulate without affecting the “real” or production data. The advantage of having a demo company is that it allows users to become familiar with the software without having to use real data. Consider the option of training managers or “key users” of the system only, who will then be available to train other members of your team in house thus reducing training costs overall.

Be prepared to factor some level of training into your overall budget. This will ease users into using a new system and hopefully foster ownership of the tasks that will be performing in the system.

Working Demo

Some vendors will present beautiful PowerPoint presentations showing you corporate information and often screen shots of the software tailored to what you, the prospect, wants to see. This is not enough. Some vendors will have a demo environment that they will allow you to access so that you can poke around and get a feel for the software. As the software is new to you, the demo might not have all the features available and even if it did you might not know where to look, this isn’t enough. Some will show you a demo of their system, showing you the bits and pieces that they want to show. This isn’t enough either. Indicate to the vendor what your specific needs are and insist that they show you at least some of the functionality working on their application. The data doesn’t have to be specific to your company, and they don’t need to show you every single field that you may require in a particular form, but they should be able to walk you through some of your key functions all the way to the level of reports generated or how the information will look on the dashboard with sample data.  This is a good indication that the software can, perhaps with tweaking, address your business needs, and that the sales people know and understand what they are selling and aren’t spinning stories of what their software can and cannot do.

In conclusion, with so many issues to consider, choosing a software vendor should be done carefully and thoroughly. However, if you use the above checklist and do the due diligence, you should be able to make an informed decision and choose the best partner to help meet your business needs.

Choosing the Right Software Vendor (part 1)

Whenever you purchase software used to manage a significant part of your business operations, in the software vendor you are also choosing what will hopefully be a long-term partner for your business. Selecting the appropriate vendor is just as important as selecting the right software with the right features at the right price. Just as you may have a checklist in selecting the software such as particular functionality and pricing, when considering vendors it’s helpful to have a checklist of criteria as well. If you don’t do proper due diligence, you may be committing your company to an unstable relationship.

The full list will be presented here, but part two of this post will delve a bit deeper into the last 4 criteria recommended for evaluating a software vendor.

Here are some things to consider:

• Vendor Stability
• References
• Software Upgrades and Version Release
• Maintenance and Support
• Implementation
• Training
• Working Demo

Vendor Stability

You may be purchasing directly from the manufacturer or from a reseller. In either case, when assessing stability find out how long the product manufacturer has been in business, how many employees it has and what their installed base is. It’s important to select a software provider who will be around for years, and longevity and a large install base can be one indicator of stability. This can also indicate whether the vendor will continue to upgrade and improve their software, but we’ll get to that below. This is less important in the reseller. When considering a reseller make sure to ask for a letter from the manufacturer indicating that they stand behind this partner and will support the partners’ customers in any eventuality. In terms of stability, look beyond the organization marketing the software and do the research on the manufacturer.

References

Ask for references. Even if the software is a perfect fit for your company, this will hopefully be a long-term relationship and you need to check out the vendor and/or reseller. The vendor should be able to put you in touch with references using the software, and the resellers should be able to put you in touch with other companies for which they have provided similar services. Call the references and ask questions such as:

• Has the system improved your overall performance?
• Does it do everything you expected?
• Are your employees satisfied with it?
• Are you satisfied with the level of service provided?
• How does the vendor/reseller react when you have problems?

 

Software Upgrades and Version Release

Technology changes quickly and you want to make sure that your vendor is not only up-to-date with the current technological advances, but continues to upgrade their software to address technological advances. Updates and new releases also indicate a commitment to the software. Ask how the provider handles bug reports and feature requests, how often they release new versions and what if any costs are involved in upgrading. In general software fixes or service packs are offered as part of the on-going maintenance, but different vendors have different schemes for upgrades to new releases. Some will require payments for new versions; some will provide them free-of-charge as long as you pay your annual maintenance fees. So in terms of upgrades and new versions ask about frequency, policy and costs.

With so many software vendors and resellers fighting hard for your business, you need to choose wisely so that you don’t wind up with an excellent software system behind which is a company that no longer exists. These top three criteria are good indicators that the company behind the product has staying power, good working relationships with its customers and a vision for the future. Our next installment will address understanding the actual working relationship you will potentially have with each vendor, so that you enter a partnership with eyes wide open.