Date: August 14, 2020
Many warehouses rely on legacy systems based on outdated warehouse management tools – Excel, paper, and home-grown systems – to manage warehouse operations. It’s understandable why. As the old saying goes, “If it ain’t broke, don’t fix it.” However, as scalability, speed, and order accuracy become increasingly important to compete in today’s logistics industry, often these legacy systems can’t consistently meet customer service level agreements. That’s why now is the time to consider migrating to a modern warehouse management system (WMS) to save labor hours, enable growth, and cut costs. Let’s consider the types of legacy systems, the advantages of a WMS, and pro tips to successfully migrate from legacy warehouse management processes to more efficient warehouse management system.
For the third-party logistics (3PL) warehouse that wants to harness the current ecommerce fulfillment opportunity and expand to meet demand, the key to success is scaling operations to meet demand. With the ecommerce penetration in the US growing as much in the past three months as it did in the past 10 years, ill-prepared 3PL warehouses may miss the single biggest opportunity for the logistics market in the past decade.
One major obstacle to a 3PL’s continued success and growth is inefficiency caused by legacy systems. The three most common legacy tools that we see in the third-party logistics industry are Excel, paper-based methods, and home-grown systems. Why are these solutions inferior to warehouse management software? Even though these methods may seem to work reliably, they have significant drawbacks.
With 750 million users worldwide, Microsoft Excel is one of the most widely used software tools by far within the logistics industry and for businesses generally. Consider how reliant your warehouse is on Excel to operate your business. The benefits of Excel include a low technical learning curve, handy pivot tables, and easy formulas to calculate inventory totals. However, when multiple staff members refer to and edit the same reports in Excel throughout a business day, it becomes difficult to have one identical version of the same report to refer to. This can cause staff to make ill-informed decisions based on inaccurate data and different versions of the same report.
You might think, “Doesn’t Google Sheets or OneDrive Excel Sheets enable us to reference the same version of a report?” Although cloud-based reports are real-time, shareable, and superior to saving them locally on a hard drive, these methods do not eliminate tedious hours of manual work every week required to update these spreadsheets and they don’t reduce the chance of human error. Wouldn’t it be nice to have an accurate view of all your inventory in one application that your staff can access from anywhere without manually updating? In addition, using a warehouse management system’s real-time connections to carriers and 3rd party shopping carts like Shopify could enable your staff to fulfill ecommerce orders more efficiently, resulting in even more time savings. Thankfully, this isn’t wishful thinking and is possible with inventory management software.
Alternatively, we have seen some warehouses using paper-based methods to manage common workflows such as assigning pick jobs and tracking inventory. All too often, 3PL warehouse managers personally hand each employee a stack of papers pick job assignments, making these pick jobs difficult to track, often inaccurate because of the lack of real-time visibility of warehouse operations, and prone to human error. Paper-based processes are also over-reliant on individual employees for knowledge of internal workflows, so when these individuals are unavailable, 3PL productivity could suffer. A warehouse that wants to avoid being overdependent on employees for processes and would like complete visibility of operations, inventory, and order status should consider migrating to a paperless warehouse with a cloud-based warehouse management system.
At 3PL Central, we frequently encounter warehouses with home-grown systems, or software that a 3PL hires a developer or IT professional to custom-build to manage their unique workflows. Home-grown systems have their advantages like customizability for specific warehouse operations. However, these systems can become hard and expensive to maintain. The total cost of ownership for maintaining these systems over time is not often considered. First, you have the upfront costs of software development and hardware purchases. To host a system onsite, a warehouse must buy a server to run its custom-built software and hire a software developer to build a WMS from scratch. We live in the software industry and understand that software must be continually fixed and maintained, so ongoing maintenance and support can quickly add up.
To make sure your technical operations run smoothly day-to-day, you may need to hire onsite IT managers who have technical expertise. With the IT manager’s labor costs, system maintenance costs, and upfront hardware costs, you’re looking at spending more than six figures annually. Compare this to the more affordable option of buying a cloud-based WMS like 3PL Warehouse Manager for a fraction of the price, meaning you don’t need to buy hardware or hire expensive developers and IT managers to maintain it and you get automatic upgrades as the new WMS feature are added. You could save tens of thousands of dollars annually, have more reliable system performance, and free technical support, avoiding expensive maintenance and labor costs.
Now that we have discussed the limitations of legacy systems – time-consuming manual entry, lack of complete visibility of inventory, and higher total cost of ownership – we can appreciate the advantages of a cloud-based warehouse management system. Three advantages include: automated inventory management with mobile barcode scanning, real-time visibility of warehouse data, and lower total cost of ownership.
One of the challenges we mentioned earlier with Excel and paper-based methods is that these legacy processes introduce the opportunity for human error. By barcoding inventory and using a mobile device to scan pick jobs and verify orders before they ship out the door, you significantly reduce the chance for human error. Warehouse management systems can also save staff time by avoiding the need for manual data entry into a spreadsheet or on paper. We have witnessed staff save 161+ labor hours per month by adopting a WMS.
While legacy systems create information silos where staff have different versions of the same report, cloud-based warehouse management systems provide real-time visibility of the same information accessible from any internet-enabled device. What allows a warehouse management system to do this? Cloud technology. No longer is data restricted to local computers. Instead, a WMS gives warehouse managers the power to view their warehouse data from any web browser or mobile device because their data is stored in the cloud. And with real-time cloud-based data, integrating with shopping carts and marketplaces becomes infinitely easier and opens up new opportunities for your 3PL warehouse.
Previously we mentioned that home grown systems can be very expensive to build and maintain. The total cost of ownership is much less for a cloud-based warehouse management system. Why? System maintenance and technical support are outsourced to a technology advocate like 3PL Central, who has free 24/7 technical support and product teams to continually improve system performance. Individual 3PLs can’t necessarily afford these resources individually – but collectively, they can leverage the expertise of a WMS service provider and learn from peers within communities of third-party logistics professionals.
It’s time to liberate your warehouse from the limitations of legacy systems. What pro-tips can you leverage to successfully migrate from legacy systems to a modern cloud-based WMS? First, document your warehouse’s current step-by-step workflows, carriers, necessary integrations, inventory information, warehouse location numbers, and shipment volumes. WMS software providers need this information to automate your workflows and to configure the right settings for your specific operations. Second, you want to clearly outline your rate sheet and pricing so that you can automate invoice management and generation. Third, pick a WMS provider with comprehensive implementation services to setup your warehouse management system for you, advise you on industry best practices, and provide adequate training for your staff on how to use the software. This is key. You want to work with a partner who understands the technology and your industry such as 3PL Central. To request a demo of our warehouse management software, click here.
Nathan is an experienced SaaS product marketing manager who is passionate about creating compelling product messaging. Working closely with product, marketing, and sales teams, he is responsible for crafting effective product strategies and content to share the benefits and features of 3PL Central's solutions for third-party logistics warehouses. Previously, he has shared technology solutions with state DOTs such as the New Jersey Turnpike Authority and wireless solutions for warehouse AGV manufacturers.
3PL Central provides cloud-based WMS solutions for 3PLs so they can transform paper-based, error-prone businesses into service leaders focused on customer satisfaction, efficient operations, and growth.