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Chuck Schaeffer Warehouse Management System Deployment Lessons

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 By Chuck Schaeffer

The Overlooked and Underestimated WMS Success Factors

Warehouse Management Systems (WMS) help cut operating costs, reduce inventory levels and increase responsiveness to demand. Considering a new WMS begins with clear and measurable goals—and once those objectives are clearly defined, selecting WMS and Material Handling Equipment (MHE) vendors should be approached as a systemic process with planning, resourcing, budget, milestones and other actions dedicated to any IT project. Software implementors know they need a warehouse management system approach and deployment framework to avoid risk and methodically reach a successful conclusion, but they often don't know the issues that may pose the greatest challenges. Here we examine the often overlooked and underestimated critical success factors when planning the deployment of a warehouse management system.

WMS Planning

Planning has two primary components; planning within the four walls of the warehouse and everything else. Planning within the four walls starts with a clean slate, is often driven by a single objective of operational efficiency, and leverages well established Warehouse Management System best practices. Material Handling Equipment and Warehouse Management Software vendors have planning down to a variable-based routine process. On the other hand, planning for systems outside the four walls of the warehouse addresses the limits of legacy systems, requirements of internal departments and relationships of external stakeholders—requiring much more tact and persistence in order to realize slated objectives.

Because WMS are designed and built for high efficiency operations, they are not as good at dealing with inconsistencies and exceptions that come from upstream bad practices or inaccurate information. To avoid inventory problems and bottlenecks at the warehouse, the non-WMS interfaces need to be thoroughly vetted and diligently managed to ensure accurate and timely flow of information to the WMS. For example, it is important to insure suppliers' adherence to electronic documents and auto identification industry standards.

Instead of having IT conform in order to match the WMS and MHE vendors' implementation timelines, a master timeline based on clear deliverables that match the company's objectives is important for a successful outcome. Once a thorough assessment is completed with gap analysis, measurable objectives and forecast ROI, the required investment and payback can be realistically understood and delivered in terms the C-suite wants to hear. Planning is much more than just a proposed approach and project schedule, and should include the data to support informed investment decision making at multiple levels in the organization as well as the analysis needed to assure risk is mitigated to the maximum extent and the company will not contribute to the all too frequently cited implementation failure statistics.

When calculating a warehouse management system total cost of ownership (TCO) be extra cognizant of the hidden costs from a poorly implemented WMS such as taking physical inventory counts to straighten up the financials, managing disruptions to the supply chain and the labor associated with routinely fixing systems while in fire fighting mode. And even with the best plans, there are going to be exceptions which need to be planned, such as customer and vendor returns, freight claims, misplaced inventory and occasional glitches. Exception handling plans are a part of any future implementation and need a support structure with escalation policies, compliance adherence policies and systemic processes.

System Integration

WMS interfaces have five dimensions: processing inbound shipments based on information from other systems, documenting outbound shipments for other systems, updating inventory activity to the financial systems, managing exceptions, and feeding data to reporting systems.

  • Inbound Interfaces—The main informational requirement for inbound shipments is to support higher operating efficiencies. The information needs to be timely, accurate and adhere to industry standards. Operational planning is most effective with early detailed information on inbound shipments. Inbound operations are driven by trusted electronic documents and auto identification to process receipts, along with instructions for processing the inventory. The inbound interface processes data from a combination of internal upstream systems, data exchanged with trading partners and trailer appointments from the carriers.
  • Outbound Interfaces—The warehouse is required to provide the same level of timely, accurate information to the recipients of their outbound deliveries. Additionally, the carriers and internal upstream systems will have informational needs from the warehouse.
  • Financial Systems—Warehouse management software is required to provide inventory costing and transactional activities to the financial systems. Activities for the financial systems include receipts, shipments and inventory adjustments. Depending on what the warehouse is used for, interfaces to the financial systems feed procurement, accounts payable, account receivable, inventory transfers and inventory control applications.
  • Exceptions—Some of the business and inventory exceptions can be resolved within the four walls of the warehouse. Other exception types require interactions with external systems, such as for inventory shrink from physical counts, inventory returns or return merchandise authorizations (RMAs), and claims.
  • Reporting—Because Warehouse Management Systems are operational systems typically geared for transactional processing, their databases are generally not designed for analytical reporting, performance monitoring or mid-to-long term planning. WMS analysis, monitoring and planning requirements may be best handled by a reporting database or analytical application updated with interfaces from the WMS.

Software Testing

At a minimum, software implementation best practices call for 5 phases of software testing: Unit Testing, Functional Testing, System (Regression) Testing, User Acceptance Testing and Operational Readiness Testing. Unit, System and User Acceptance testing are standard practices; a natural progression starting with individual components, then the system interfaces and finally system-wide integrity and usability.

Functional testing is focused on WMS configuration. Typical configuration items are managing the MHE, storage optimization, inventory put-away and picking policies, value added services (such as ticketing) and quality control checks. Operational Readiness Testing (ORT) is the final test. The focus of ORT is on procedures and personnel.

There are other technical tests that confirm if the servers, databases and networks are sized correctly for peak operating conditions, and tests that ensure the WMS is capable of dealing with systems failures while mitigating the impact to warehouse operations.

Go Live

After planning, building interfaces, testing and confirming a successful pilot (aka conference room pilot), a WMS successful deployment still has a few hurdles left to navigate: data migration, training personnel, re-orienting the organization to the new systems, converting the operations to the new WMS, and system cut-over. Upper and mid level management need to be aware of the potential risks during the cut-over to new systems—and part of both the mitigation approach and change management strategy.

Re-orienting the organization involves changing job descriptions, reporting structures, and executing critical onetime tasks up to and through the go-live period. This is unique to each company, and the impact extends outside the organization to many other key stakeholders important to the company's success. Re-orienting the organization needs to be planned and managed top down and not driven by system vendors, IT, project managers or operations; although they should be consulted in planning and managing the WMS go-live.

Converting over to the new warehouse management software will be impacted based on whether the warehouse is new to the organization or if the organization is converting from a different system. A new warehouse is going to require a longer timeline to recruit and build up the warehouse team and business processes. Converting from an existing system is going to include inventory conversion, which can be done systematically by IT or by operations with the assistance of IT.

The system cut-over process needs both collaboration and direction from IT management. Items of concern include full and accurate data conversion, system integrity, the impact to the user community, coordinating support efforts in off hours, ensuring proper timing of events and quality control for the many cut-over processes.

Post Go Live Support

Even when there is a high degree of confidence for a successful deployment, it is best to anticipate a number of issues with critical severity and plan accordingly. A robust support plan includes a commitment from your WMS and MHE vendors to have their Subject Matter Experts (SME) and support staff available in real time. Depending upon your project scope and criticality, your support plan may also mobilize a temporary support team with the expertise to quickly access and make quality judgments, and the authority to quickly fix problems with a command structure that can coordinate and assign resources.

After the dust settles and activities evolve to housekeeping tasks, the deployment support plan can transition to a normal ongoing support mode. A great next step is to perform a postmortem to identify enhancements along with priorities. Finally, don't forget the dreaded project documentation which will prove helpful for ongoing warehouse management system changes, extensions, re-configurations and upgrades. End

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Author  Author: Chuck Schaeffer
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When calculating a warehouse management system total cost of ownership (TCO) be extra cognizant of the hidden costs from a poorly implemented WMS such as taking physical inventory counts to true up up the financials, managing disruptions to the supply chain and routinely fixing systems while in fire fighting mode.


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