Many companies are still in the dark regarding their options to better manage today's increasingly complex inventory and asset management challenges. In fact, some recent studies suggest that more than 58 percent of all warehouses are not even being managed by a rudimentary integrated warehouse management system (WMS). Instead, these firms are using homegrown software solutions and/or the archaic practice of manually entering and managing data on spreadsheets. Not only does this miss the mark but it actually compounds the issue(s) by requiring dozens of unnecessary man-hours every month, which causes a strong ripple effect of production loss across the organization because professionals are forced to manage the spreadsheets and count beans instead of concentrating on their core competencies. And this is all without mentioning that these older methods are costly and extremely difficult to maintain and upgrade, and they certainly prohibit companies from achieving supply chain excellence and maximum revenue generation.
There can be substantial consequences for companies that do not tap the software-as-a-service (SaaS) model for warehouse management. The economy has forced companies to do more with less, thus "lean and mean" is becoming the way of the future. On-demand provides companies with faster time-to-value and rapid deployment, making it easier for companies to do more with less and achieve supply chain excellence quickly by moving away from the high costs and extensive customizations required for those who continue to purchase the more traditional on-premise software solutions.
Some savvy companies have flipped the switch and are reaping the benefits via on-demand (SaaS) WMS solutions. On-demand software is a smart alternative to the very expensive traditional on-premise model of buying and using software.
For those of us unaware of what software as a service is, SaaS is a deployment model in which a host company gives permission to the customers to use an application that the vendor hosts. Simply put, the customer rents the right to use the application from the on-demand or host company. More often than not, on-demand WMS software is an attractive alternative for companies using on-premise software because they have grown tired of high start-up costs and are frustrated with long implementations and the difficult and cumbersome maintenance processes.
What has changed that makes it more difficult to work in today's warehouses and made it imperative to implement a SaaS WMS?
The most significant changes are the increased velocity of the business world, client demands and the speed at which products are required to go from Point A to Point B and then to C, D and even E and F - all without error. Cross-docking and other just-in-time delivery models have also become increasingly popular with customers. Therefore, a customer expectation for end-to-end management of shipments has increased exponentially over the last 10 years, along with the need to avoid costly penalties for incorrect or late shipments.
Another change in the historic WMS distribution model is the complexity of the product mix. In an effort to meet customer needs and maximize delivery efficiency, distributors, manufacturers and transportation companies are more willing then ever to break up bulk quantities of products and configure "mixed pallets" of complementary goods. This adds to the hefty challenge of tracking warehouse-based assets that are shipped, returned or changed in some way during the fulfillment and settlement process. So, with more products moving at higher speeds with increasingly complex configurations, companies need more sophisticated systems to manage the mission-critical process of seamless warehouse operations.
In response, smart business owners are reducing the time required to "pick and pack" at the warehouse by implementing a solid SaaS WMS - and saving a lot of cash on the way.
The ability today's leading SaaS WMS products have to effectively and consistently manage warehouse processes is the sweet spot for companies seeking top-of-the-line warehouse functionality and supply chain excellence.
If a company can benefit from a warehouse management system, the next big question in the current economy is, can they afford a new system?
When purchasing traditional software, there is much more to pay for than just the company's licensing fee. First, there are start-up costs, including hardware and security. Additionally, they need to pay for IT personnel and recurring costs, including software maintenance, which is typically 18 percent of the initial software cost.
In addition to the high start-up costs, most companies cannot afford the regular upgrades, nor can they take advantage of the latest functionality in the software because the company is several releases behind its own release schedule -- thus prolonging the time-to-benefit from the often promised, yet seldom delivered, enhanced productivity via dashboards and analytics.
Furthermore, due to the heavy customization necessary with traditional software, companies often are not able to easily upgrade or modify the software despite the fact that the company's business processes have changed. Not to mention the age-old issue with traditional software packages where many projects fail or are plagued with cost overruns and time delays.
Fortunately, there is a proven alternative model for delivering warehouse management system software that does not require any of the traditional set-up and software licensing costs, implementation risks and ingoing support challenges. SaaS WMS software provides companies an attractive option that is the equivalent of powering the globe with electricity without being a power company.
As a result, the way inventories, assets and warehouses are managed have been radically improved. Under the on-demand model the customer is assured of 24x7x365, always-on functionality, 99.9 percent on-time deliveries and order accuracy, as well as remaining on budget and receiving a prompt return on investment, ultimately reducing the risk of implementation failure to zero.
Most on-demand systems are subscription-based where the customer pays for the value they receive from the system and only pay for what it uses (number of seats, per transaction, etc.). The customer does not have to pay a large upfront cost for a software license, and since hardware infrastructure is not required users spend a lot less money on hardware, maintenance and administration. That means customers now have access to the applications they could not afford with outdated, less functional and more expensive traditional software license models.
The bottom line is that the on-demand model makes it possible for customers to eliminate the risk of failure and immediately recognize significant value from their WMS software purchases.
When a company moves to a SaaS model they begin to enjoy the perfect amount of functionality for specific needs. They don't require as much education and technological savvy to manage the product and processes, which reduces IT staff requirements. And with near-zero capital expenditure, companies are enjoying a much lower total cost of ownership and a significant increase in revenues and customer satisfaction.
The world is changing, as are the needs, time constraints and demands of today's increasingly busy and scrutinized warehouses. Therefore, companies need to evaluate their warehouse operations and if they are not already tapping a good SaaS model, they need to research, consider and implement a good on-demand WMS to provide configurable and flexible options for their growing and ever-changing businesses.
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