• Inventory/Warehouse
  • Supply Chain

3 Factors Driving Warehouse Management System Growth and What They Mean for You

Written by Elias Schoelmann
July 12, 2017

A variety of trends are coming together to transform the modern warehouse management system.

A variety of trends are coming together to transform the modern warehouse.

The warehouse management system market is experiencing a period of rapid growth as a variety of industry conditions come together to make the supply chain, distribution and fulfillment aspects of businesses extremely important. Many of these systems involve warehouse automation.

According to a Markets and Markets study, the WMS market will achieve a value of approximately 3.23-billion by 2023. This represents a compound annual growth rate of 14.1% from 2017 – 2023. A variety of market dynamics are leading to this growth, but let’s look at three of the most important ones and discuss how organizations can prepare for the shifting operational climate.

1. E-commerce Industry Growth

Markets and Markets pointed to rapid growth in the e-commerce sector. This conclusion is backed, to a degree, by eMarketer research that found total sales in retail reached approximately $22-trillion in 2016, a 6% increase. By 2020, the industry is expected to bring in annual revenues of $27-trillion.

Growth in the e-commerce market is fueling dramatic changes in the warehouse. For example, many online retailers have found themselves needing to accelerate order fulfillment and shipping to maintain their competitive place in the industry. As a result, organizations must work to gain a greater degree of control and transparency across their supply chains so they can not only keep up with demand but move items into and out of the warehouse at the rapid pace required within the industry. All of this must be done without sacrificing key performance metrics, such as inventory shrinkage and customer satisfaction rates.

The warehouse is at the center of the e-commerce revolution, and innovation is key if retailers want to keep up. Furthermore, the demand isn’t just for faster, more agile operations within the warehouse. Instead, retailers often find themselves needing to interconnect operations across multiple locations, including brick-and-mortar stores, websites and mobile apps. All of the data from these diverse sources needs to be compiled in a common enterprise resource planning system and integrated into warehouse management systems to provide full visibility into inventory levels and shipping requirements at all times.

These challenges are coming together to make modern warehouse management systems critical across the e-commerce sector, but that isn’t all. The changing consumer expectations in e-commerce are starting to extend into other industries, something that is evident in one of the other market drivers identified in the Markets and Markets study.

2. Multi-channel Distribution Networks

We already touched on the need for multi-channel distribution when discussing the growth of the e-commerce market, but a closer look shows just how much it is impacting the warehouse. For example, a few of the key issues organizations must keep in mind include:

  • How they will differentiate between shipments heading out to consumers compared to those going to stores. In most cases, consumer-focused shipments will contain a large variety of products going out to diverse locations and at a high velocity. Conversely, restocking store inventories will require more structured, high-volume shipments. The inventory management system, ERP and mobile data collection systems that would gather data related to these shipments must work in tandem to ensure distribution teams get the updates and notifications they need to stay abreast of stock levels and keep all stakeholders informed at all times.
  • How they will distribute inventories across locations. In some cases, having dedicated distribution centers for stores and separate ones for online customers can allow for smoother operations. In others, organizations find it better to consolidate. The difference really comes down to the product types and workflows. What doesn’t change, regardless of the model, is the need to intentionally locate products in geographically strategic warehouses to simplify and accelerate product delivery. Amazon is a prime example of this tactic, as it regularly experiments with different ways to locate goods so it can get them into customers’ hands quickly. A multi-channel setup simply adds another layer of complexity to this decision.
  • How they will keep supply chain stakeholders aware of inventory levels and supply needs. Mobile data collection and ERP integration are particularly important here, as organizational leaders will need to be kept constantly up to date about product levels and production capabilities to ensure there is always enough stock – or enough manufacturing capacity – to meet expected demand. All of this data may also be delivered to vendors and similar partners so they can identify when you will need new products.

The rise of multi-channel distribution networks adds complexity to warehouse operations, creating a situation in which gathering data from diverse sources and distributing it across the organization is especially important.

3. Global Supply Chain Networks

Markets and Markets also identified the rise of global supply chain networks as a major contributor to the demand for warehouse management systems.

The cause-and-effect situation here is fairly straightforward – organizations have more geographic distribution within their warehouse network, adding a layer of complexity when it comes to management. Managing a supply chain across borders also introduces regulatory and localization complexity that must be dealt with as users in different countries use the same underlying systems to get the job done. WMS solutions play a critical role in helping organizations deal with the added logistical burden that comes with globalization, and leading solutions can take this to another level through specialized data collection and integration tools.

For example, RFgen offers a remote warehouse management solution that provides 99.9% system uptime, allows for accurate data collection even when issues such as network downtime arise and can connect with other enterprise systems to keep data up to date in near real-time. Spreading out warehouse facilities across geographic locations isn’t as challenging when remote management is an option, making it easier to expand globally, even if it means having to locate distribution centers in remote, hard-to-connect locations.

A variety of conditions are coming together to transform the warehouse sector, leading to more demand for technologies that drive innovation. RFgen offers integrated mobile data collection solutions for JD Edwards, Oracle E-Business Suite, SAP, and more that extend ERP data to any Windows, iOS or Android mobile device and are built to meet the needs of the modern enterprise.