The question was asked in the recent past. How are the needs of a WMS in BRIC (Brazil, Russia, India, China) countries different from a developed country such as the US? To answer that question, lets examine why enterprises decide to implement WMS in the first place. What needs do they expect a WMS to address? There are many, but in the end they can all be categorized in one of the three generic buckets:
Improve Operating Margins: Improvement of operating margins by reducing logistics cost is one of the biggest motivator for using WMS. To achieve cost reduction a warehouse must efficiently use the warehouse resources. In other words get more by using less of:
Labor and Equipment
Warehouse Space
Inventory on hand
Improve Customer Service: Excellent customer service is essential to winning and retaining your customer base. WMS can make a big difference by facilitating:
Accurate Order Promise Date
On Time Shipment of Orders
Minimize shipping inaccuracies
Improve Adaptability: A WMS can help you adapt your warehousing infrastructure to changing business environment. At the very least a WMS should enable:
Flexibility of Operations
Adherence to compliance and standards
Supply Chain Collaboration
Clearly, even though this may sound somewhat counter-intuitive, a BRIC enterprise needs WMS for all the same reasons as a company in a developed economy. What is different about BRIC and other developing economies is the operating environment characterized by:
Fragmented Supply Chain: Relatively poor road and port connectivity implies that there are high lead times and inventories. Complex multi-level supply chains involving wholesalers, stockists, etc. are common. The intermediaries in the supply chain are usually small with little investment in sophisticated supply chain execution systems.
Low Transaction Volume: Fragmented retailing and complex supply chains imply large number of smaller warehouses with many of them in unorganized sector
Low labor costs: Therefore less emphasis on warehouse automation
As a result current expectation from WMS are different. However a consumer boom fueled by rising income levels and easy credit is rapidly changing the operating environment in BRIC economies. Competition is becoming more intense and consumers are becoming more discerning. As a result the following trends are fast emerging:
Shift in the bargaining power from manufacturers to retailers to consumers: This trend would eventually result in consumers getting the upper hand with respect to choices, price and availability of merchandise. A world class warehouse and distribution system would be a key competitive differentiator.
Consolidation of supply chain: Changes in supply chain will be rapid. The consolidation may involve relying on large logistics service providers (3PLs) for warehousing and distribution needs or retailer owned DCs built to distribute over a large geographical area and to gain economies of scale.
Supply Chain Collaboration: Collaboration between retailers and manufacturers will gain momentum with more electronic order exchange, ASN, item code standards, electronic manifesting, etc. in warehousing and distribution space.
What is needed is a WMS that can rapidly adapt to these changing business conditions including an exponential increase in business volume. Due to low labor costs, warehouse automation is not critical. However the ability of WMS to improve warehouse efficiency by facilitating lower inventory, faster lead times and better utilization of warehouse floor space gains even more importance. In a developing economy, the volumes often do not justify big IT investments in WMS. Therefore a low overall cost of deployment for WMS is critical. What is needed is a WMS with least amount of additional technology infrastructure and a WMS that is tightly integrated with the corporate information backbone. WMS can also help the enterprises provide superior customer service through perfect order fulfillment. A WMS implemented in a silo-ed environment may not be the most efficient option from this perspective. Due to rapid growth and changes in the business environment, WMS must have technological flexibility to adapt to:
Higher Volume: WMS must be able to scale very well to higher volumes and growth without compromising existing infrastructure.
Changing standards: With more emphasis on supply chain collaboration, rapid changes to standards is to be expected. Can WMS adapt to these changes? Does it have open and transparent approach to standards?
Technology Platform Changes: WMS should be capable of supporting paper based system today however in future it should have the capability to support more advanced Auto-ID technologies such as Barcode and RFID along with with transaction support on wireless hand held devices. As enterprises grow and mature, it should provide flexibility to support automation using voice or other robotic equipments. In effect, enterprises should have the flexibility to move up the sophistication ladder without phasing out their existing WMS infrastructure.
