ARC Advisory Group does global market research on the warehouse management system market. We write about trends in this study. I am the author of this year’s study. One trend I believe is imminent is that the market appears to be poised to bifurcate in terms of functionality. There will increasingly be Tier 1 solutions with complex optimization. Low-cost solutions that can be implemented quickly will also be increasingly implemented. However, the need for Tier 2 solutions that include a moderate amount of functionality will diminish.

Why Will the Need for Tier 2 Solutions Diminish?

In short, because of intelligent automation. Autonomous mobile robot providers, like Locus Robotics, provide their own optimization. Warehouse workers work alongside autonomous mobile robots to fulfill orders. Warehouse execution systems emerged to optimize work across both the manual and more automated parts of the warehouse. Leading WMS providers – like Manhattan Associates, Blue Yonder, and Körber Supply Chain – offer WES.

Locus Robotics does not allow the WES to optimize the work it does. The warehouse mobile robot system downloads orders from the WMS for the work that will be done in its zone. The more orders it downloads, the greater the AMR system’s ability to intelligently group orders and increase throughput. Locus has introduced bots with larger payloads, and its value proposition now extends beyond each picking to include case picking.

In addition to warehouse robotic solutions taking over the task of optimizing work in the distribution center, vendors like Lucus Systems can layer optimization on top of legacy or Tier 3 WMS solutions. Lucus Systems is best known as a provider of voice AutoID solutions for the warehouse, but they are more.

What Does This Mean for Providers of Tier 1 Solutions?

They must focus on optimization and other functionality that drives labor productivity. Functionally, a Tier 1 solution should include the following:

• A warehouse execution system – these solutions optimize work across the automated and manual activities in a warehouse.
• Wave Planning involves batching several tasks into a wave of work. This minimizes travel for floor-level associates.
• Task Interleaving—Picking is the most important activity in a warehouse. But when the need to get work out the door diminishes, it makes sense to interleave picking with other tasks. For example, if a worker is in an aisle making a pick, and they are next to a slot that has not been cycle counted for a while, the worker can count the number of items in that slot.
• eCommerce order streaming—E-commerce orders are typically small, one or two items. Rather than batching these orders to gain labor efficiency, it often makes sense to drop them—or at least the orders that customers were promised would be delivered quickly—to the floor as soon as they are received. Thus, E-Commerce orders are fulfilled with something known as “order streaming” logic.
• Route Optimization—Wave planning is a form of route optimization. By dropping a group of orders to an associate that all require work to be done in a particular zone, that associate does not have to travel as much. However, a zone typically involves several aisles. What is the best way to route a worker into and out of those aisles, particularly if the aisle is congested with other workers? Zebra has introduced location tags that attach to associates. Combining those tags with new optimization logic could take worker routing to the next level.
• Engineered Labor Standards—The goal of a labor management system is to get employees to work at a steady pace consistently throughout the day. Engineered labor standards are developed to ensure that if a picker works efficiently and steadily, they can hit their goal for the day. Often, companies will give bonuses to workers if they can work faster than the standard pace. Labor productivity always goes up when an LMS is introduced, and these solutions provide quick payback.
• Pack Optimization—Companies often use an excessive amount of packaging to ship items to customers. The extra boxes, bubble wrap, tissue paper, and other packaging materials have a negative impact on the environment and increases shipping costs. Pack optimization works to fill shipping containers efficiently.
• Labor forecasting – Here, historical data is used to forecast how many workers will be required on a given day or week to complete the work that will hit the warehouse. This works even better if warehouse executives are included in the integrated business planning process. It works better still, if the DC has engineered labor standards in place. In many cases, a warehouse may have visibility to a significant proportion of the orders that will drop to the warehouse in the coming day or two. In this case, schedules can be adjusted so that the warehouse has neither too many nor too few workers.
• A Warehouse Digital Twin – Currently, planner interfaces can show the layout of the warehouse, provide heat maps of SKUs about to expire, or show empty slots. But digital twins will be capable of more. The digital twin should include simulation capabilities.
• The User Interface – Generative AI will be used to create highly intuitive user interfaces for warehouse planners.

When it comes to Tier 1 solutions, the architecture also matters. Ideally, the solution should be based on a public cloud architecture. The platform should include other supply chain applications sharing the same master data and database. The solution should be componentized. Components should not be inside the warehouse management or transportation system but rather independent, sharable, and composable. For example, if transportation plans can leverage pack logic components, typically used by a WMS, trucks can be filled more fully.

A few weeks ago, I sat down to speak with Mike Noble, SVP of Technology and Jonathan Mitchell, Director of Software Services at Open Sky Group. In this conversation, we discussed seeing your supply chain through a new lens, and how this can help to achieve improved visibility.

Specifically, I asked Mile and Jonathan to give me some background on Open Sky Group, as well as a rundown of the Kaleidoscope platform, and the different components that link the end to end supply chain. Below are some of the key takeaways from our discussion, as well as a little background on the supply chain technology consulting and systems integration market. You can also watch the full video below.

Supply Chain Technology Consulting and Systems Integration Market

ARC Advisory Group’s research on the independent WMS consultant market, what we call WMS Consulting Specialists, shows that these companies deliver value to their clients through their domain expertise and relative independence. WMS Consulting Specialists serve as trusted advisors to their clients, driving multi-faceted projects from concept to go-live and beyond. At the same time, their relative independence supports the third-party objectivity that is so valuable to companies embarking on strategic projects.

Independent WMS consultants understand the intricacies of the WMS applications and the platforms on which they operate. Very often they have developed and refined their implementation processes over years of experience. As such, each consultancy has unique elements in its methodology.   Consultancies have also taken their experiences a step further and standardized their knowledge and capabilities into products. These products are typically software applications that extend the capabilities of the WMS vendors with industry-specific functionality or integrative enhancements that further the value of WMS and adjacent technologies.

About Open Sky Group

Open Sky Group is a supply chain technology company, boasting a carefully curated portfolio with best-of-breed partners and cutting-edge SaaS platforms. The company’s diverse operational expertise in multiple supply chain solutions empowers its customers’ operations with proven service.

At Open Sky Group, supply chain experts are dedicated to revolutionizing the way companies manage their supply chain. Open Sky is a global specialist in Blue Yonder supply chain platform. The company offers a unique methodology of disciplined agility and a no modifications approach that enables rapid implementation and upgrade of Blue Yonder WMS, WLM, WFM and TMS for a faster ROI.

Introduction to Kaleidoscope

Open Sky Group’s Kaleidoscope evolved from their experience trying to solve customers’ multi-instance challenges. These companies had multiple systems and no way to connect them. It morphed into solving customers’ call center volumes by providing a self-serve portal to address issues that occurred in real time. Kaleidoscope closes the blind spots traditional WMS’s leave behind. Additionally, Kaleidoscope is not just a product; it is a vision and journey, that Open Sky is embarking on to invest and partner. The goal is to shed light on any blind spots and elevate connectivity across the supply chain.

Kaleidoscope as a Platform

Kaleidoscope is a cloud SaaS offering that is secure. The most visible elements are the four lenses: Enhanced Client Billing, Supply Chain Portal, Supply Chain Insight, and Supply Chain Chat. The lenses are all built around the common Kaleidoscope core platform, which is responsible for extracting, storing, and indexing an entire supply chain’s worth of data. Kaleidoscope supports a diversified supply chain, including mixed vendors across different verticals. Kaleidoscope supports the selection of best-of-breed per vertical, and provides transparency across WMS, TMS and LMS solutions.

Enhanced Client Billing

With the flexibility of our supply chain agnostic connectors Enhanced Client Billing provides a comprehensive billing platform across the supply chain. Leveraging any piece of data into a base-event allows easy configuration of any number of billable activities that can feed into client facing invoices. The system guard rails detect events not configured for specific clients, or missing rate information, notifying you of potential revenue leakage. Enhanced Client Billing supports grouping transactions into different levels of charge groups and general ledger codes, along with a robust public API supports easy integration with your payment processing systems. Combined with Supply Chain Portal, 3PL clients have self-service capabilities similar to your online banking.

Supply Chain Portal

Supply Chain Portal can make your data interactive and support day-in-the-life solutions. Supply Chain Portal supports secure, selective exposure of your data to your end customers. Additionally, Supply Chain Portal can tie together the loose ends of your supply chain.

Note: Today’s post is part of our “Editor’s Choice” series where we highlight recent posts published by our sponsors that provide supply chain insights and advice. Today’s article comes from Open Sky Group and helps to decipher some myths around buying a WMS.

Buying a warehouse management system (WMS) is a big decision. Many people haven’t even purchased a house that costs as much as a WMS and the search process can be overwhelming. The WMS buying process and the succeeding implementation involve thousands of details that are easy to overlook. Add the fact that each WMS provider’s information can be a bit self-serving, it becomes apparent that you need to do your homework. After all, you don’t know what you don’t know.

There are plenty of resources available to walk you through the process of identifying your functional needs and setting a budget in the process of finding a WMS solution. You can refer to those for the nuts and bolts. In this article, we are going to dispel a few myths that are rife in the WMS buying process:

WMS Buying Myth 1 – All WMS software is created equal.

Warehouse management systems have come a long way in the last 30 years, however, there are still very distinct differences between tier one, tier two, and tier three WMS offerings. Lower tier solutions generally offer a range in capabilities from basic inventory control to moderate WMS functionality but may be limited in sophistication, adaptability, configurability, and integrations. These systems will work for some companies but can limit complex distribution needs and high throughput. Tier one systems are the most feature-rich, configurable, and tech-forward.

The best advice? Make no assumptions about the solution or providers that you’re considering regardless of how big or small they are. Know you are not comparing apples to apples, especially if the products sit in different tiers. Your unique business requirements must be met by the solution, so know your needs and be prepared to look under the hood of each of the solutions you’re considering.

Myth 2 – What you see in the demo is what’s in the product.

WYSIWYG is often not the case in warehouse management software demonstrations. Software vendors are demonstrating portions of the system that will knock your socks off. Sometimes the slick features shown are functionality that is in development or is on the product road map but not actually included in the current version of the system. Ask questions. Is this feature deployed and running in the real world, or just the demo environment?

Myth 3 – I don’t need all the features in a tier one system and the tier two system is a lot cheaper.

Try not to be short-sighted. Making a statement like that is like saying, “I don’t need to save a million dollars for retirement, I’m good with $250,000.” You need to look at the total cost of ownership and keep in mind future needs. Perhaps today your needs are not overly complex, but this might not be true down the road. Things change. Make sure your system is configurable and has the capacity to grow and change as your business evolves. Think back five years ago – could you have predicted that you would be selling through Amazon? Lesser systems have constraints when pushing major volumes. What if you make an acquisition? Or business booms?

Think about your challenges today and your opportunities down the road. Look at the product road map for the solutions you are considering. Buy a system with a platform that matches your vision and has room to grow.

Myth 4 – A tier one system is going to take too long to implement.

All WMS solutions have the potential for timely and smooth implementations. It depends on the fit compared to your needs, the configurability of the system, and the expertise of your implementer. Tier one solutions have deep functionality built into the standard system that is configurable to your specific needs. It can be just as easy to implement as tier two or three since the functionality is built into the system and does not require code modifications. Tier two and three systems can be easy to install if they are a fit for your business. We’ve seen companies purchase a tier two system because it looked good in the demo, but during implementation, the system proved inadequate for their needs. After 14 months of limping along, they pulled the plug and purchased a tier one WMS.

Click HERE to read the full article; click HERE for part 2.