I just completed the data gathering process for ARC’s global Warehouse Management Systems (WMS) market research study. Although I have not yet completed the market forecast, I certainly have a good feel for what the WMS market experienced in 2021. As expected, WMS solution providers (in aggregate) experienced accelerated growth. This above-trend growth is primarily a result of the longer-term factors influencing the markets’ growth, supplemented by a surge in pent-up demand from COVID-19 related hesitancy in 2020. A number of factors are currently influencing both the growth of the market and the shift in WMS users’ requirements and priorities.
WMS Users’ Priorities and Changing Requirements
In 2021, the WMS market continued its shift from perpetual licensing to SaaS licensing. WMS suppliers indicated that their users continued to operate within tight labor markets and a shortage of reliable workers. As a result, technologies and capabilities that drive productivity were in high demand. WMS functionality such as labor management and resource management were hightly important. More specifically, users were looking to better measure, plan, and forecast resource needs to get the most out of their operations. Also of interest was integration with complementary technologies such as warehouse automation and robotics. Modern APIs, pre-built connectors, and warehouse analytics were all noted. Additionally, providers with a WCS/WES considered it as an important characteristic of their offering. WMS providers indicated that they anticipate these trends to continue, as many of the market drivers are a result of the ongoing transition to e-commerce and omni-channel, and the demand these fulfillment processes place on warehouses and fulfillment operations.
The ongoing shift to e-commerce and omni-channel continues to be the major factor impacting WMS requirements. Although the growth rate of e-commerce sales slowed in 2021, that was to be expected given the anomaly of 2020, with lockdowns, fears of COVID-19 transmission, and general avoidance of public spaces. I expect e-commerce growth to continue back on its longer-term trend as COVID-19 related impacts and the subsequent rebounds subside. Many WMS vendors note that, In addition to increased warehouse complexity, the number of facilities is expected to continue growing at a rapid pace. Microfulfillment centers are expected to increase to increase as part of the trend to accommodate rapid fulfillment. In general, the measurement for warehouse performance is evolving into an increasingly complex combination of high throughput, high efficiency, and increasing responsiveness (reducing cycle time) while minimizing risk.
The competitive environment is encouraging WMS providers to continually modernize their software platforms to offer more modular solutions that reduce customization requirements while delivering greater functionality, more streamlined implementations, easier upgrades, and improved cybersecurity. There also appears to be a resurgence in discussions about common supply chain platforms for WMS and adjacent applications and capabilities. Although these capabilities have existed for some time, the common platform capabilities in product roadmaps are more extensive than in the past. They are in the form of modern microservices and integrations with newer technologies such as robotics providers’ fleet management systems. General IT improvements such as these allow providers to enhance the value proposition of their solutions, better retain customers, and expand their solution footprint and overall “share of wallet” within their installed base of customers.
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